Public Bond

A bond, issued by a U.S. government-sponsored agency. The offerings of these agencies are backed by the U.S. government, but not guaranteed by the government since the agencies are private entities. Such agencies have been set up in order to allow certain groups of people to access low cost financing, especially students and first-time home buyers. Some prominent issuers of agency bonds are Student Loan Marketing Association (Sallie Mae), Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac). Agency bonds are usually exempt from state and local taxes, but not federal tax. also called agency bond.

How to Talk About Your Weaknesses in an Interview

One of the most hated, yet frequently asked, interview questions is, "What is your greatest weakness?" We all have faults, but the last place we want to talk about them is in a job interview. Next time you are up for a job, take these three steps to prepare for this dreaded question:

Prepare an answer. Yes, you need one. Make it brief, honest, trivial, and not a fault. If possible, use something out of your control. For example, "My biggest weakness is that my professional network is in Boston, but I'm looking to relocate to Los Angeles."

Get input. Run your answer by a few friends and colleagues to make sure it sounds reasonable.

Ask a question back. In the interview, deflect the attention away from you by ending your response with a question for the interviewer.

Accounts Receivable Services

Accounts receivable is the amount of money owed to an individual, company, organization for the goods / services provided to them. It is a current asset of a company and represents the amount that customers owe to a business. Accounts receivable are payable by the customers within a year from the date of sale of goods / services.

Accounts receivable service is a vast area and includes :

•Accounts receivable recognition

•Accounts receivable valuation

•Accounts receivable disposal

These processes can be cumbersome and time consuming therefore, large organizations either use accounting softwares or outsource the process to professional accounting firms. This helps to manage it in a better way.

Organizations realize that not all debts will be collected and recovered, so they make an allowance for bad debts, that are in turn subtracted from the total accounts receivable. Accounting firms collect debts on behalf of their clients through settlement offers, payment plan negotiation and sometimes legal action.

Advantages Accounts Receivable Outsourcing

Outsourcing the accounts receivable provides the following advantages:

•Ensuring internal control

•Effective expense administration

•Timely reconciliation of accounts receivable

•Saving time and man hours

•Preventing fraudulent invoices

Accounts Payable Services

Accounts payable is the amount of money that a company owes to its vendors for goods and services purchased on credit. It is a current liability of a company and has to be fulfilled within a year.

Accounts payable result in negative cash flow of a company at the time they are paid off. Every company keeps a track of its accounts payable and also the time period when it is to be paid.

Accounts payable reconciliation & management can be a time consuming process and can take a long time to resolve discrepancies. Large organizations therefore use accounting softwares or take the help of professional accounting firms for managing its accounts payable. A close check should also be made on fraudulent invoices, to prevent embezzlement.

Accounts Payable Auditing

Professional auditors insist their clients to provide approved invoices, supporting documents and expense reports at the time of making payments through checks and other methods. This helps to keep a track of all the documentation related to purchase and also keep a check on the genuineness of invoice. Inflated or duplicate invoices get eliminated at this stage.

Advantages of Accounts Payable Outsourcing

Outsourcing the accounts payable process can help the organization by:

•Providing a method of internal control

•Providing expense administration

•Providing monthly reconciliation of accounts payable

•Saving time and man hours

•Preventing fraudulent invoices

•Preventing overpayment and duplicate invoices

Bank Reconciliation Statement

A bank reconciliation statement is a statement prepared by organizations to reconcile the balance of cash at bank in a company's own records with the bank statement on a particular date.

This statement is the most common tool used by organizations for reconciling the balance as per books of company with the bank statement and is made at the end of every month. The main objective of reconciliation is to ascertain if the discrepancy is due to error rather than timing.

The difference between the two records on a given date may arise because of the following:

•Cheques drawn but not yet presented to the bank.

•Cheques received but not yet deposited in the bank.

•Interest credited and not recorded in the organization's books.

•Bank charges debited but not recorded in the organization's books.

Bank Reconciliation Statement process is being outsourced to professional accounting firms by large organizations. This helps them have an accurate view and also ensure that the company's bookkeeping is good. Accounting firms make monthly reconciliation statements for clients and help them determine any discrepancy.

Online Talent Management Certificate Program (TMCP) – Registration Open

In a fast changing business environment the ability to manage talent effectively has become the key differentiator that determines the success of organizations. More organizations are realizing that their employee's talents & skills drive business performance and success. Organizations which have already put into practice the Talent Management imperative have uncovered tremendous benefits.

Indian Institute of Organization Development is proud to offer the Talent Management Certificate Programs in collaboration with the Institute of Organizational Development , USA . The program provides participants the opportunity to learn & practice the disciplines Talent Management and will prepare them to meet the Talent Management challenges in organizations. It will equip you with relevant tools & techniques, frameworks & models and develop competencies to emerge as an expert Talent Management Professional.

TMCP Courses

1. Introduction to Talent Management

2. Talent Acquisition & Onboarding

3. Performance Management

4. Succession Planning

5. Talent Engagement and Retention

6. Talent Management Development Strategies

Benefits of this Certificate Program

-Learn how to develop and implement Talent Management Strategies in your own organization.

-Understand how to develop Talent Management Strategies and implementation plans to create sustainable programs

-Recognize how build a brand for your organization as an employer of choice.

-Identify how to influence Senior Leaders and gain buy in for support, resources and accountability

-Leverage the talent in your organization by managing performance, developing a talent pipeline and building a pool for future successors.

-Become a certified Talent Management Professional - Certified by Institute of Organizational Development , USA and Indian Institute of Organization Development.

-You will enhance your professional qualifications and increase your value to the organization

-Gain valuable experience to leverage your skills in the field of Talent Management, Leadership Development, Organization Effectiveness & more.

-Prepare yourself for a role in Talent Management or to become an Independent Consultant.

The Facilitators from USA/India offer their expertise with 25 or more years of experience in the field of Talent Management and Organization Development. We offer International curriculum with relevant customization to reflect regional requirements.

Key Highlights

-Certified by Indian Institute of Organization Development and Institute of Organizational Development, USA .

-Enhance your professional qualifications and increase your value to the organization

-Gain valuable experience to leverage your skills in the fields of Organization Development, Talent Management, Organization Effectiveness & more.

-Prepare yourself for a role in Talent Management or to become an Independent Consultant.

-Be recognized in our international directory of professionals and receive continued support and resources.

-International curriculum with relevant customization to reflect regional requirements.

-Instructor led courses based on Action Learning method to facilitate maximum learning & skill development.

-Restricted class size to support team learning and focus on the participant.

-Highly Interactive virtual & classroom learning environment.

- Opportunity to network & learn from other professionals

Program Contact – Please write to us for the detailed brochure.

Rachel Jemimah - Indian Institute of Organization Development

No.130, Old Mahabalipuram Road , Sholinganallur, Chennai 600 119.

Email – rachel@iiod.in Web - http://www.iiod.in/

Very interesting behavioural case study

FORTY years ago Walter Mischel, an American psychologist, conducted a famous experiment.

He left a series of four-year-olds alone in a room with a marshmallow on the table. He told them that they could eat the marshmallow at once, or wait until he came back and get two marshmallows. Recreations of the experiment on YouTube show what happens next. Some eat the marshmallow immediately. Others try all kinds of strategies to leave the tempting treat alone.

Nothing surprising there. The astonishing part was the way that the four-year-olds' ability to defer gratification was reflected over time in their lives. Those who waited longest scored higher in academic tests at school, were much less likely to drop out of university and earned substantially higher incomes than those who gobbled up the sweet straight away. Those who could not wait at all were far more likely, in later life, to have problems with drugs or alcohol.

A Top-Down Approach To Investing

An area that most investors struggle with is the art of picking stocks. Should they base their decisions solely on what the company does and how well it does it? Or should investors be more concerned about larger macroeconomic trends, such as the strength of the economy, and then determine which stocks to buy? There is no right or wrong answer to these two questions. However, investors should develop systems that help them to achieve their investment goals. The second option mentioned is referred to as the top-down investing approach to the market. This method allows investors to analyze the market from the big picture all the way down to individual stocks. This differs from the bottom-up approach, which begins with individual stocks' fundamentals and eventually expands to include the global economy. This article will concentrate on the process used when investors implement the macro-to-micro style referred to as the top-down approach.

Start at the Top: The Global View

Because the top-down approach begins at the top, the first step is to determine the health of the world economy. This is done by analyzing not only the developed countries of North America and Western Europe, but also emerging countries in Latin America and Asia. A quick way to determine the health of an economy is to look at the amount of gross domestic product (GDP) growth of the past few years and the estimates going forward. Oftentimes, it is the emerging market countries that will have the best growth numbers when compared with their mature counterparts.

Unfortunately, because we live at a time in which war and geopolitical tensions are heightened, we must not forget to be mindful of what is currently affecting each region of the world. There will be a few regions and countries throughout the world that will fall off the radar immediately and will no longer be included in the remainder of the analysis simply due to the amount of financial instability that could wreak havoc on any investments.

Analyze the Trends

After determining which regions present a high reward-to-risk ratio, the next step is to use charts and technical analysis. By looking at a long-term chart of the specific countries' stock index, we can determine whether the corresponding stock market is in an uptrend and is worth taking further time to do some analysis on or is in a downtrend, which would not be an appropriate place to put our money at this time. These first two steps can help you discover the countries that would match your wants and needs for diversification. (Need more information? Read Trader's Corner: Finding The Magic Mix Of Fundamentals And Technicals and Charting Your Way To Better Returns.)

Look to the Economy

The third step is to do a more in-depth analysis of the U.S. economy along with the health of the stock market in particular. By examining the economic numbers such as interest rates, inflation and employment, we are able to determine the current strength of the market and have a better idea of what the future holds. There is often a divergence between the story the economic numbers tell and the trend of the stock market indexes.

The final step in macroanalysis would be to analyze the major U.S. stock indexes such as the S&P 500 and Nasdaq. Both fundamental and technical analysis can be used as barometers to determine the health of the indexes. The fundamentals of the market can be determined by such ratios as price-to-earnings, price-to-sales and dividend yields. By comparing the numbers to past readings, it can help determine whether the market is at a level that is historically overbought or oversold. Technical analysis will help ascertain where the market is in relation to the long-term cycle. Use charts that show the past several decades and zone down the time horizon to a daily view. For example, indicators such as the 50-day and 200-day moving averages are used to help us find the current trend of the market and whether it is appropriate for investors to be invested heavily in equities. (To read more about fundamental analysis, see Advanced Financial Statement Analysis.)

So far, our process has taken a macro approach to the market and has helped us determine our asset allocation If, after the first few steps, we find that the results are bullish, there is a good chance a majority of the investment-worthy assets will be from the equities market. On the other hand, if the outlook is bleak, the allocation will shift its focus from equities to more conservative investments such as fixed income and money markets.

Microanalysis: Is This Investment Right for You?

Deciding on an asset allocation is only half the battle. The next integral step will help investors determine which sectors to focus on when searching for specific investments such as stocks and exchange-traded funds (ETFs). Analyzing the pros and cons of specific sectors (ex. health care, technology and mining) will narrow the search even further. The process of analyzing the sectors involves tactics used in the prior approach such as fundamental and technical analysis. In addition to the mentioned tools, investors also must consider the long-term prospects of the specific sectors. For example, the emergence of an aging baby boom generation over the next decade could serve as a major catalyst for sectors such as healthcare and leisure. Conversely, the increasing demand for energy coupled with higher prices is another long-term theme that could benefit the alternative energy and oil and gas sectors. After the entire amount of information is processed, a number of sectors should rise to the top and offer investors the best opportunities. (To learn more about the different industries, see our Industry Handbook.)

The emergence of ETFs and sector-specific mutual funds has allowed the top-down approach to end at this level in certain situations. If an investor decides the biotech sector is an area that must be represented in the portfolio, he or she has the option of buying an ETF or mutual fund that is composed of a basket of biotech stocks. Instead of moving to the next step in the process and taking on the risk of an individual stock, the investor may choose to invest in the entire sector with an ETF or mutual fund.(For more insight, see How To Use ETFs In Your Portfolio and Advantages Of Exchange-Traded Funds.)

However, if an investor feels the added risk of selecting and buying an individual stock is worth the extra reward, there is an additional step in the process. This final phase of the top-down approach can often be the most intensive because it involves analysis of individual stocks from a number of perspectives.

Fundamental analysis includes a variety of measurements such as price/earnings to growth ratio, return on equity and dividend yield, to name a few. An important aspect of individual stock analysis will be the growth potential of the company over the next few years. Ideally, investors want to own a stock with a high growth potential because it will be more likely to lead to a high stock price.

Technical analysis will concentrate on the long-term weekly charts, as well as daily charts, for an entry price. At this point in time, the individual stocks are chosen and the buying process begins.

The Positives of Top-Down

The proponents of the top-down approach argue the system can help investors determine an ideal asset allocation for a portfolio in any type of market environment. Oftentimes a top-down approach will uncover a situation that may not be appropriate for large investments into equities. The ability to keep investors from over-investing in equities during a bear market is the biggest pro for the system. When a market is in a downtrend, the probability of picking winning investments drops dramatically even if the stock meets all the required conditions. When using the bottom-up system, an investor will determine which stocks to buy before taking into consideration the state of the market. This type of approach can lead to investors being overly exposed to equities and the portfolio will likely suffer. Other benefits to the top-down approach include the diversification among not only top sectors, but also the leading foreign markets. This results in a portfolio that is diversified within the top investment worthy sectors and regions. This type of investing is referred to in some small circles as "conversification", a mixture between concentration and diversification.

The Not-So-Positives of Top-Down Investing

So far, the top-down approach may sound foolproof; however, there are a few factors investors must consider. First and foremost, there is the possibility that your research will be incorrect, causing you to miss out on an opportunity. For example, if the top-down approach indicates that the market is set to continue lower in the near future, it may result in a lesser exposure to equities. However, if your analysis is wrong and the market rallies, the portfolio will be underexposed to the market and will miss out on the rally gains. Then there's the problem of being under-invested in a bull market, which can prove to be costly over the long term. Another downfall to the system occurs when sectors are eliminated from the analysis. As a result, all stocks in the sector are not included as possible investments. Oftentimes there will be a leader in the sector that is overlooked due to this process and will never make its way into the portfolio. Finally, investors could miss out on "bargain" stocks when the market is near lows.

Find What You've Been Looking For

In the end, investors must remember there is no single approach to investing and that every approach has its own pros and cons. One of the keys to becoming a successful long-term investor is finding a system that best fits your goals and objectives. Maybe the top-down approach is just what you've been looking for!

Jensen's Measure

What Does Jensen's Measure Mean?

A risk-adjusted performance measure that represents the average return on a portfolio over and above that predicted by the capital asset pricing model (CAPM), given the portfolio's beta and the average market return. This is the portfolio's alpha. In fact, the concept is sometimes referred to as "Jensen's alpha."

Jensen's Measure

If the definition above makes your head spin, don't worry: you aren't alone! This is a very technical term that has its roots in financial theory.

The basic idea is that to analyze the performance of an investment manager you must look not only at the overall return of a portfolio, but also at the risk of that portfolio. For example, if there are two mutual funds that both have a 12% return, a rational investor will want the fund that is less risky. Jensen's measure is one of the ways to help determine if a portfolio is earning the proper return for its level of risk. If the value is positive, then the portfolio is earning excess returns. In other words, a positive value for Jensen's alpha means a fund manager has "beat the market" with his or her stock picking skills.

Sharpe Ratio

What Does Sharpe Ratio Mean?

A ratio developed by Nobel laureate William F. Sharpe to measure risk-adjusted performance. The Sharpe ratio is calculated by subtracting the risk-free rate - such as that of the 10-year U.S. Treasury bond - from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. The Sharpe ratio formula is:

Sharpe Ratio

The Sharpe ratio tells us whether a portfolio's returns are due to smart investment decisions or a result of excess risk. This measurement is very useful because although one portfolio or fund can reap higher returns than its peers, it is only a good investment if those higher returns do not come with too much additional risk. The greater a portfolio's Sharpe ratio, the better its risk-adjusted performance has been. A negative Sharpe ratio indicates that a risk-less asset would perform better than the security being analyzed.

A variation of the Sharpe ratio is the Sortino ratio, which removes the effects of upward price movements on standard deviation to measure only return against downward price volatility.