this portfolio is about economics

1. Table of Content
Week 1: Introduction to Economics ....................................................................................................2
Week 2 : Economic System ............................................................................................................... 13
Week 3 ; Economics Influence on House Hold Purchases ................................................................... 22
Week 4 ; Credit Creation .................................................................................................................. 29
Week 5 ; Financial Institutions .......................................................................................................... 39
Week 6 ; Investments....................................................................................................................... 48
Week: 7 ; Consumer Price Index ....................................................................................................... 59
Week 8: Presentation....................................................................................................................... 68
Week: 9 ; Exchange Rates ................................................................................................................. 85
Week 10 ; Self Reflection.................................................................................................................. 97
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Week 1: Introduction to Economics
Economics is the study of the production and consumption of goods and the transfer of wealth
to produce and obtain those goods. Economics shapes the world. Through economics, people
and countries become wealthy. Because buying and selling are activities vital to survival and
success, studying economics can help one understand human thought and behavior.
There are two main types of economics: macroeconomics and microeconomics.
Microeconomics
It focuses on the actions of individuals and industries, like the dynamics between buyers and
sellers, borrowers and lenders.
Macroeconomics
On the other hand, takes a much broader view by analysing the economic activity of an entire
country or the international marketplace.
Economics in our daily life
Economics has an enormous effect on the daily lives and wallets of all people, even if they
aren't actually involved in economic studies. The principles of supply and demand play out
every day for every person making purchasing decisions on goods and services, and in keeping
or finding a job. Changes in circumstances or government mandates on any aspect of an
industry creates a ripple effect of price changes through multiple industries to the end consumer
Example
Your income is not unlimited. With that limited income, you want to buy a lot of things. You
have to choose what product to buy, at which price and how much quantity. Now, let's say that
you have 13 last dollars in your pocket. With that money you can either buy a ticket for a movie
or buy beers and pizzas and watch the TV-show. What you do is what gives you more pleasure,
or, as we say, what maximize your utility. You make an economic choice.

3. 3
Article One:
What Is Economics and Who Cares?
Economics is the study, description, and analysis of the ways in which societies produce and distribute
goods and services. Economics can be applied to ancient civilizations—the Greeks and Phoenicians
had economies—and to modern societies at the national, state, and local levels. For instance, California
has the largest economy of any state, while New York City has the largest of any U.S. city. Even a
household has an economy (although this does not cover “home economics”). Any system for deciding
what is produced, how is it produced, and who gets to consume it, whether it is the system of an entire
planet—as in the global economy—or a defined segment of society, is an economy and can be understood
in economic terms.
An Inexact Science?
Economics is the study, description, and analysis of the ways in which a society produces and distributes
goods and services. In economics, the term goods and services refers to everything that is produced in
the economy—all products and services, including government “services,” such as national defines and
the prison system. Economics is one of the social (as opposed to natural or physical) sciences, as are
psychology and anthropology. Social sciences examine and explain human interaction. Because of this,
the findings and knowledge produced by a social science generally cannot be as exact or predictable as
those of a physical science, such as physics or chemistry.
For instance, if you put water in a saucepan on a stove, you know with certainty that it will boil when it
reaches 212° Fahrenheit. But if you are the governor of a state and you raise the state sales tax, you
cannot be certain about the effect it will have or be able to answer any of the following basic questions:
How much money will the tax raise? In order to avoid the tax, will people take more of their business
across the state line? Will they shop more often on the Internet, where there is no sales tax (yet)? Will
companies in the state experience lower sales and generate lower corporate income taxes as a result?
Economics deals with these kinds of questions, but it seldom comes up with totally precise explanations
or correct predictions. Why? Because human behaviour in the economic realm is as complex and
mysterious as it is in any other sphere of life.
It's Not Perfect, but It Helps!
The good news, however, is that economics can tell us the likely results of a sales tax. In addition, as a
scientific discipline, economics provides extremely useful analytical tools and frameworks for
understanding human behaviour in the areas of getting and spending money, which (let's face it) occupies
the majority of most people's waking hours.
Economics deals with fundamental, often life-or-death issues. That is why economics is important. Its
challenge lies in its mysteries: We don't know when the next expansion or recession will arrive. We don't
know if a federal tax cut will help the economy grow. We don't know which new technologies should be
encouraged and which

4. 4
Ones won't pan out. And, tragically, we don't know how to overcome poverty, hunger, crime, and other
evils rooted in economic reality. But economics is the branch of the social sciences most concerned with
these matters, and is it the one that's well equipped to help us deal with them.
Economics provides a framework for understanding government policies, business developments, and
consumer behaviour here and abroad. It provides a rich context for making decisions in your business,
professional, and financial life. The economy is to business as the ocean is to fish. It is the environment in
which business operates. The more you know about this environment, the better you will function as a
manager, analyst, and decision maker.
Excerpted from The Complete Idiot's Guide to Economics © 2003 by Tom Gorman. All
rights reserved
Including the right of reproduction in whole or in part in any form. Used by arrangement with
Alpha Books, a member of Penguin Group (USA) Inc.
Article Two
Overview of Economics: Three Economists and Their Theories
The three most important economists were Adam Smith, Karl Marx, and John Maynard Keyne
(Pronounced canes). Each was a highly original thinker who developed economic theories that were put
into practice and affected the world's economies for generations.
Adam Smith and His Invisible Hand of Capitalism
Adam Smith, a Scot and a philosopher who lived from 1723 to 1790, is considered the founder of modern
Economics. In Smith's time, philosophy was an all-encompassing study of human society in addition to an
inquiry into the nature and meaning of existence. Deep examination of the world of business affairs led
Smith to the conclusion that collectively the individuals in society, each acting in his or her own self-interest,
manage to produce and purchase the goods and services that they as a society require. He called
the mechanism by which this self-regulation occurs “the invisible hand,” in his ground-breaking book,
The Wealth of Nations, published in 1776, the year of America's Declaration of Independence.
While Smith couldn't prove the existence of this “hand” (it was, after all, invisible) he presented many
instances of its working in society. Essentially, the butcher, the baker, and the candlestick maker
individually go about their business. Each produces the amount of meat, bread, and candlesticks he judges
to be correct. Each buys the amount of meat, bread, and candlesticks that his household needs. And all of
this happens without their consulting one another or without all the king's men telling them how much to
produce. In other words, it's the free market economy in action. In making this discovery, Smith founded
what is known as classical economics. The key doctrine of classical economics is that a laissez-faire
attitude by government toward the marketplace will allow the “invisible hand” to guide everyone in their
economic endeavours, create the greatest good for the greatest number of people, and generate economic
growth. Smith also delved into the dynamics of the labour market, wealth accumulation, and productivity
growth. His work gave generations of economists plenty to think about and expand upon.

5. 5
Karl Marx: It's Exploitation!
Karl Marx, a German economist and political scientist who lived from 1818 to 1883, looked at capitalism
from a more pessimistic and revolutionary viewpoint. Where Adam Smith saw harmony and growth,
Marx saw instability, struggle, and decline. Marx believed that once the capitalist (the guy with the
money and the organizational skills to build a factory) has set up the means of production, all value is
created by the labor involved in producing whatever is being produced. In Marx's view, presented in his
1867 tome Das Kapital (Capital), a capitalist's profits come from exploiting labor—that is, from
underpaying workers for the value that they are actually creating. For this reason, Marx couldn't abide the
notion of a profit-oriented organization. This situation of management exploiting labor underlies the class
struggle that Marx saw at the heart of capitalism, and he predicted that that struggle would ultimately
destroy capitalism. To Marx, class struggle is not only inherent in the system—because of the tension
between capitalists and workers—but also intensifies over time. The struggle intensifies as businesses
eventually become larger and larger, due to the inherent efficiency of large outfits and their ability to
withstand the cyclical crises that plague the system. Ultimately, in Marx's view, society moves to a two-class
system of a few wealthy capitalists and a mass of underpaid, underprivileged workers.
Marx predicted the fall of capitalism and movement of society toward communism, in which “the people”
(that is, the workers) own the means of production and thus have no need to exploit labor for profit.
Clearly, Marx's thinking had a tremendous impact on many societies, particularly on the USSR (Union of
Soviet Socialist Republics) in the twentieth century. In practice, however, two events have undermined
Marx's theories. First, in socialist, centrally planned economies have proven far less efficient at producing
and delivering goods and services—that is, at creating the greatest good for the greatest number of
people—than capitalist systems. Second, workers' incomes have actually risen over time, which undercuts
the theory that labor is exploited in the name of profit. If workers' incomes are rising, they are clearly
sharing in the growth of the economy. In a very real sense, they are sharing in the profits.
While Marx's theories have been discredited, they are fascinating and worth knowing. They even say
something about weaknesses in capitalism. For instance, large companies do enjoy certain advantages
over small ones and can absorb or undercut them, as shown by examples as old as Standard Oil (now
ExxonMobil) and General Motors and as recent as Microsoft and IBM, in high technology, and ConAgra
and Dole in agriculture. In addition, as we will see in Wealth and Poverty, income distribution in U.S.-
style capitalism, which is a “purer,” less-mixed form of capitalism than that of Europe, can tend to create
a two-tier class system of “have's” and “have not's.”
Keynes: The Government Should Help Out the Economy
John Maynard Keynes, a British economist and financial genius who lived from 1883 to 1946, also
examined capitalism and came up with some extremely influential views. They were, however, quite
different from those of Karl Marx and, for that matter, Adam Smith. In 1936, he published his General
Theory of Employment, Interest, and Money. We will examine Keynes's theories later. They mainly
involve people
Propensity to spend or to save their additional money as their incomes rise, and the effects of increases in
spending on the economy as a whole. The larger significance of Keynes's work lies in the view he put
forth about the role of government in a capitalist economy. Keynes was writing during the Great

6. 6
Depression. It's worth noting at this point that in the United States unemployment reached about 25
percent and millions of people had lost their life savings as well as their jobs. Moreover, there was no
clear path out of the depression, which led people to seriously question whether Smith's invisible hand
was still guiding things along. Was this worldwide collapse of economic activity the end of capitalism?
Keynes believed that there was only one way out, and that was for the government to start spending in
order to put money into private-sector pockets and get demand for goods and services up and running
again. As it turns out, President Franklin D. Roosevelt gave this remedy a try when he started a massive
public works program to employ a portion of the idle workforce. However, the United States entry into
World War II rendered this a less than pure experiment in government spending. The war effort boosted
production to extremely high levels (to make guns, ammunition, planes, trucks, and other materiel) while
simultaneously taking millions of men out of the civilian workforce and into uniform.
Keynesian economics is an approach to economic policy that favours using the government's power to
spend, tax, and borrow to keep the economy stable and growing. A Keynesian is an economist or other
believer in Keynesian economics. The validity and desirability of Keynes's prescription for a sluggish
economy—using government spending to prime the pump—are still debated today. Again, we will look
at the theory and practice of what came to be known as Keynesian economics later.
Many other economists of note advanced theories and otherwise added to the body of knowledge in the
science. We will look at their ideas as they arise in our examination of economics. However, Adam
Smith, Karl Marx, and John Maynard Keynes (later Lord Keynes) are widely recognized as the most
influential—Smith because he founded and formalized the science of economics, Marx because he
challenged capitalism and had such a forceful impact on society and politics, and Keynes because he
prompted new practices as well as new theories in the world of economic policy. Keynes also played a
key role in the founding of the International Monetary Fund and in other political economic measures
taken at the end of World War II. Excerpted from The Complete Idiot's Guide to Economics © 2003
by Tom Gorman. All rights reserved including the right of reproduction in whole or in part in any form.
Used by arrangement with Alpha Books, a member of Penguin Group (USA) Inc.

7. 7
Summary
Adam Smith
Adam smith was a Scottish moral philosopher and a pioneer of a political economy. In 1776 he
wrote a book “The Wealth of Nations” Smith laid the intellectual framework that explained the
free market and still holds true today. He is most often recognized for the expression “the
invisible hand,” which he used to demonstrate how self-interest guides the most efficient use of
resources in a nation’s economy, with public welfare coming as a by -product. To underscore his
laissez-faire convictions, Smith argued that state and personal efforts, to promote social good
are ineffectual compared to unbridled market forces.
Example for Invisible Hand; If I sell candies for 1 peso each and Christian sells them for 2 pesos
for 3 pieces, he will get all the business making me lose mine so in order to compensate for my
loss I should be forced to lower my price as to stay alive in the business. I am guided by an
invisible hand which is my self-interest to gain profit or as Adam Smith would say everyman for
himself
The theory of the Invisible Hand states that if each consumer is allowed to choose freely what to
buy and each producer is allowed to choose freely what to sell and how to produce it, the
market will settle on a product distribution and prices that are beneficial to all the individual
members of a community, and hence to the community as a whole. The reason for this is that
self-interest drives actors to beneficial behaviour. Efficient methods of production are adopted to
maximize profits. Low prices are charged to maximize revenue through gain in market share by
undercutting competitors. Investors invest in those industries most urgently needed to maximize
returns, and withdraw capital from those less efficient in creating value

8. 8
John Maynard Keynes
John Maynard Keynes, a British economist and monetary virtuoso who existed from 1883 to
1946, likewise inspected a free market system and concocted some amazingly compelling
perspectives. They were, in any case, very not quite the same as those of Karl Marx and, so far
as that is concerned, Adam Smith. In 1936, he distributed his General Theory of Employment,
Interest, and Money. We will inspect Keynes' speculations later. They fundamentally include
individuals'
Penchant to use or to spare their extra cash as their wages climb, and the impacts of
expansions in using on the economy as an issue. The bigger hugeness of Keynes' work lies in
the perspective he set forth about the part of government in an industrialist economy. Keynes
was composing amid the Great Depression. It's significant right now that in the United States
unemployment arrived at around 25 percent and a huge number of individuals had lost their life
investment funds and in addition their employments. Additionally, there was no get way out of
the melancholy, which headed individuals to genuinely address whether Smith's undetectable
hand was all the while directing things along. Was this overall breakdown of financial movement
the end of a free market system?
Keynes accepted that there was one and only way out, and that was for the administration to
begin using to place cash into private-part pockets and get interest for products and
administrations up and running once more. It would appear, President Franklin D. Roosevelt try
this cure attempt when he began a gigantic open works project to utilize a bit of the unmoving
workforce. On the other hand, the United States entrance into World War II rendered this a short
of what immaculate analysis in government using. The war exertion helped creation to a great
degree abnormal states (to make firearms, ammo, planes, trucks, and other materiel) while at
the same time taking a huge number of men out of the regular citizen workforce and into
uniform.
Keynesian matters in profit making is a methodology to financial arrangement that supports
utilizing the legislature's energy to use, expense, and acquire to keep the economy steady and
developing. A Keynesian is an economist or other adherent to Keynesian money making
concerns. The legitimacy and attractive quality of Keynes' remedy for a lazy economy—utilizing
government using to make preparations are still wrangled about today. Once more, we will take
a gander at the hypothesis and practice of what came to be known as Keynesian trading and
lending later.
Numerous different economists of note progressed speculations and overall added to the
collection of learning in the science. We will take a gander at their thoughts as they emerge in

9. our examination of money making concerns. Notwithstanding, Adam Smith, Karl Marx, and John
Maynard Keynes (later Lord Keynes) are generally perceived as the most persuasive Smith in
light of the fact that he established and formalized the art of commercial concerns, Marx on the
grounds that he tested private enterprise and had such a powerful effect on society and
legislative issues, and Keynes in light of the fact that he incited new practices and also new
speculations in the realm of financial arrangement. Keynes additionally assumed a key part in
the establishing of the International Monetary Fund and in other political financial measures
taken toward the end of World War II. Excerpted from The Complete Idiot's Guide to Economics
© 2003 by Tom Gorman. All rights saved including the right of proliferation in entire or to some
extent in any structure. Utilized by game plan with Alpha Books, a part of Penguin Group (USA)
I
9
Karl Marx
Karl Marx, a German economist and political researcher who existed from 1818 to 1883, took a
gander at private enterprise from a more negative and progressive perspective. Where Adam
Smith saw agreement and development, Marx saw unsteadiness, battle, and decrease. Marx
accepted that once the industrialist (the gentleman with the cash and the authoritative aptitudes
to assemble an industrial facility) has set up the method for generation, all worth is made by the
work included in delivering whatever is consistently created. In Marx's perspective, introduced in
his 1867 tome Das Kapital (Capital), an entrepreneur's benefits originated from abusing work
that is, from coming up short on specialists for the esteem that they are really making.
Therefore, Marx couldn't tolerate the idea of a benefit situated association. This circumstance of
administration misusing work underlies the class battle that Marx saw at the heart of a free
market system, and he anticipated that that battle would eventually pulverize private enterprise.
To Marx, class battle is not just inborn in the framework due to the pressure in the middle of
industrialists and labourers additionally heightens about whether. The battle heightens as
organizations in the long run get to be bigger and bigger, because of the inalienable
effectiveness of substantial outfits and their capacity to withstand the cyclical emergencies that
torment the framework. At last, in Marx's perspective, society moves to a two-class arrangement
of a couple of well off entrepreneurs and a mass of came up short on, underprivileged
specialists.
Marx anticipated the fall of free enterprise and development of society to socialism, in which "the
individuals" (that is, the specialists) possess the method for creation and subsequently have no
compelling reason to adventure work for benefit. Obviously, Marx's reasoning had a colossal
effect on numerous social orders, especially on the USSR (Union of Soviet Socialist Republics)
in the twentieth century. In practice, then again, two occasions have undermined Marx's
hypotheses. Initially, in communist, midway arranged economies have demonstrated far less
productive at delivering and conveying merchandise and administrations that is, at making the
best useful for the best number of individuals than industrialist frameworks. Second, labourers’
earnings have really climbed about whether, which undercuts the hypothesis that work is
abused for the sake of benefit. In the event that specialists' livelihoods are climbing, they are

10. 10
plainly imparting in the development of the economy. In a genuine sense, they are offering in
the benefits.
While Marx's speculations have been ruined, they are captivating and worth knowing. They
even say something in regards to shortcomings in free enterprise. For example, vast
organizations do appreciate certain focal points over little ones and can ingest or undercut them,
as demonstrated by illustrations as old as Standard Oil (now ExxonMobil) and General Motors
and as later as Microsoft and IBM, in high engineering, and Conagra and Dole in agribusiness.
Moreover, as we will see in Wealth and Poverty, pay conveyance in U.s.-style private
enterprise, which is a "purer," less-blended manifestation of a free market system than that of
Europe, can have a tendency to make a two-level class arrangement of "have's" and "have
not's."

11. 11
Bibliography
Video links
YouTube. 2014. Definition of Economics - People Respond To Incentives. [online] Available at:
https://www.youtube.com/watch?v=rt8LTN0zm3k [Accessed: 3 Dec 2014].
Education Portal. 2014. What is Economics? - Definition & Types - Video & Lesson Transcript |
Education Portal. [online] Available at: http://education-portal.com/academy/lesson/what-is-economics.
html#lesson [Accessed: 3 Dec 2014].
YouTube. 2014. Econ - 1 Definition of Economics. [online] Available at:
https://www.youtube.com/watch?v=tvMe9D0qXG4 [Accessed: 3 Dec 2014].

12. 12
Self-Reflection
In this week I learned that what economics basically is about and how it plays a role in our daily
lives and what are its consequences and Advantages in our lives. It was a bit hard to find the
appropriate information for Economics because I was studying Economics for the first time. In
this week I got to know that Economics plays a key role in each and every aspect f our lives. We
can’t even imagine that in every decision we are making use of economics. Nowadays I start
thinking and take my decisions economically that what should I do which will be helpful to me or
will it give me some profit or I will lose some thing

13. 13
Week 2 : Economic System
Economic Systems
The mechanisms that deal with the process of production, distribution and consumption of
goods and services in an economy is said to be economic system. The economic system
elaborates the relationship among residents and institutions of a country. The resources are
scarce, which creates fundamental economic problems (what & how to produce and for whom
to produce) while economic systems provide remedial answers to these problems. There three
basic types of Economic System;
Planned-Economy
It is a command economy by the state and all the resources in the economy are owned by the
government. Mostly the favoritism policies are prevailing in the economy which distracts
economic development.
Market-Economy
Free market economy where private firms owned all resources in the economy. The capitalist
system become in action which promote growth but un-equal distribution in all sectors of the
economy. Inflation, unemployment, unequal distribution of wealth etc. are the disturbances of
the free market economic system
Mixed-Economy
It has the features of the previous both economic systems
Pakistan Economic System
The planned or command economy and Market economy have many flaws that neither of
systems could deliver desirable results. Planned economic system is adopted by almost all the
countries in the world because it has summed-up the features of the command and free
economic systems. Pakistan has the mixed economic system in the country. Under the new
economic system all the decisions regarding production and distribution wealth is taken by the
private firms while government authorities imposed taxes on these business activities. The
government has the close look on the business operations in the economy and regulates the
system where necessary to monitor the malfunctions of firms.
Comparison
Pakistan and UK both have mixed economic in practice. The differences include the stability of
the economic processes in the economy. It is obvious that both external and internal factors
affect the economy of the country. UK has stability in its economic and political system while
Pakistan has suffered the volatile practices.

14. 14
12 September 2013 Last updated at 01:08
Norway: Is world’s largest sovereign wealth fund too big?
By Matthew Price BBC News, Oslo
Much of Norway's oil and gas lies beneath its beautiful landscape
Most of Europe is struggling with how to reduce spending, but not Norway. It has invested the income
from its oil and gas reserves so wisely that it now has what many consider to be the world's largest
sovereign wealth fund, estimated to be worth $1tr (£0.6tr) by 2020. But is that too big?
They play the long game on the trading floor. When Facebook announced it was going to float on the
stock market, the analysts here went to work. They assessed the pros and cons, the likely value of the
company, the chance of a big loss, and of a big gain.
Then they bought Facebook shares. Like everyone else who did they lost money almost immediately.
Unlike many others however they did not rush to sell them.
"We have the possibility in times of turbulence to sit through the turbulence," says Yngve Slyngstad, the
CEO of Norway's pension fund.
A billion dollars a week passes through the fund's office in the Norwegian Central Bank building in Oslo.
More than 200 staff work here. Another 100 in their off ices in New York, London, Shanghai and
Singapore.

15. The trading floor is calm, considered, even slightly academic. Wall Street this is not. There's no panicked
selling of stocks as markets plunge.
15
Their mission, by government mandate, is slowly and carefully to build up wealth to help fund this
country long after the oil and gas reserves run out.
"That was what happened in the 2008-2009 period," Mr Slyngstad continues. "Many other investors
were forced to sell. We had the privilege to not only sit on our assets, but to accumulate more."
'Working with reason'
In Norway's case money makes money. Profits and taxes from the oil and gas industry give the
government oil fund $1bn a week.
The fund holds on average 1% of the world's shares. In Europe it owns more than 2% of all listed
companies.
Valhall is an oilfield in the
Norwegian sector of the North Sea
That is thanks both to the hydrocarbons - and the fact that successive governments have stuck to the
political consensus that profits from the oil industry should be invested in the fund.
The government mandate for the fund specifies that it must be transparent and open. It also aims to
influence the way in which the companies it invests in behave.
It has a set of principles which guide its investment strategies, and to which it attempts to get others to
subscribe to.
"As long-term owners," says Mr Slyngstad, "we need to "make sure that the companies are long-term
profitable, and not only good for the investors, the shareholders, but for society at large.
"We work with reason and not with force."

16. But does it make a difference? The fund believes it does. In the area of children's rights for instance they
believe their stance has encouraged companies that use child labour to address the issue.
16
"Of course this is very long-term work where results are measured in not years, but decades," adds Mr
Slyngstad.
Multiple funds?
Norway is one of the richest countries per head of population. Europe's debt crisis feels very, very far
away in this affluent corner of the continent.
At Norway's Business School in Oslo however, the professor of asset management, Bruno Gerard,
believes the fund must be changed.
Erna Solberg described
her election victory earlier this week as "historic"
"It's going to be impossible to keep managing this immense flow of money within one organisation," he
says.
"It is very well-managed, but... a small mistake on a big fund can have enormous consequences. It would
be far less damaging if we had several smaller funds."
That is something Norway's newly-elected Conservative party - it will lead the next coalition government
- says it might consider.
"Should it be two or three funds not one?" asks Erna Solberg, the party's leader.
There will be a discussion, she suggests.
"Of course as Conservatives we also believe that if you have a regime with a bit more competition you
might get better results."

17. 17
Prof Gerard is convinced that is the way the debate is going. "It's not whether to split the fund - but
when to split it."
Any change in how they run things in the fund would have no effect on global markets, but it could be
crucial for Norway's future.
Some say the fund holds too many shares, and argue at least some of the profits would be better spent
on infrastructure or research and development in Norway.
Spend too much though inside the country and they risk overheating the economy.
Mr Slyngstad addresses the issue with a wry smile. "As a starting point it's better to have a large fund
than a small fund," he says.
But whatever they decide, while most of Europe grapples with how to save, Norway is well ahead.
It is focused on making sure that even when the oil does run out, the money doesn't.
Summary: Article
Using the oil and gas resources, Norway has made some wise investment decisions and gathered the
world’s greatest sovereign wealth fund. This fund is expected to touch the value of $1tr (£0.6tr) by 2020.
Norway has played some tremendous trading tricks to achieve this. They know the art of staying calm
during the turbulence period.
Work for a Cause:
Successive governments in the Norway have stuck to the policy of investing the income from oil industry
in the fund. They have made consistent efforts to ensure the transparency of the fund. Mr. Slyngstad,
the CEO of Norway's pension fund says that they work for a cause. Their aim is to bring betterment in
the society with their long-term profit goals.
Increasing the Number of Funds:
According to Bruno Gerard, the professor of asset management, managing a huge amount of money
within a single organization is quite impossible. Same are the thoughts of the leader of newly elected
Conservative Party, Erna Solberg. She said that the government may consider increasing the number of
funds.

18. 18
IEA, the major reason for this pricing issue is the US gas shale boom.
14 November 2014 Last updated at 12:13
Oil prices likely to fall further, says IEA
Oil prices are likely to continue falling well into 2015, the International Energy Agency has said.
The IEA, a consultancy to 29 countries, said weak demand and the US shale gas boom meant crude's
recent fall below $80 a barrel was not over.
On Friday, Brent crude, one of the major price benchmarks, traded at $78.13 a barrel, near a four-year
low.
"It is increasingly clear that we have begun a new chapter in the history of the oil markets," the IEA said.
"Barring any new supply problems, downward price pressures could build further in the first half of
2015."
Brent Crude Oil Futures $/barrel LAST UPDATED AT 26 NOV 2014, 12:00

19. 19
price change %
78.26 -
-0.07
-
-0.09
The organisation, set up after the "oil shock" of the early 1970s to advise major oil importing countries,
said that pressure was building on the OPEC oil producers' group to restrict supply to bolster prices.
However, there have been reports that Saudi Arabia, OPEC’s key member, is not yet willing to turn off
the taps. OPEC members are due to meet on 27 November to discuss the supply and demand issues.
Most OPEC members rely on oil revenues to support economic growth and spending.
Also, it is likely that oil and gas explorers will become increasingly worried that falling prices will make
exploration uneconomical.
Brent has fallen for eight weeks in a row, its longest losing streak since 1988, according to Reuters' data.
The US energy department said this week that it expected low fuel prices to last into next year.
Earlier this week, the IEA's Global Outlook, a report into the industry's long-term challenges, warned
that the US shale gas boom was masking serious risks to global energy security.
Summary: News
International Energy Agency (IEA) has said that the trend of falling oil prices may extend to 2015. First
half of the coming year is expected to face the pressure of low oil prices due to supply issues. The falling
price trend would have a negative impact on the oil exploration too, as the exploration will certainly
become uneconomical. Oil producing OPEC members will have to restrict the oil supply in order to make
the prices go up. They have already called for a meeting on 27th of November to discuss the concerns
regarding oil supply and demand. According to

20. 20
Bibliography
Unknown. 2014. [online] Available at: http://www.bbc.com/news/world-europe-24049876:
[Accessed: 3 Dec 2014].
BBC News. 2014. Oil price falls 'set to continue'. [online] Available at:
http://www.bbc.com/news/business-30049294 [Accessed: 3 Dec 2014].
Economywatch.com. 2014. Pakistan Economic Structure | Economy Watch. [online] Available
at: http://www.economywatch.com/world_economy/pakistan/structure-of-economy.html
[Accessed: 3 Dec 2014].
Recorder, B. 2012. Pakistan - a state in economic crises - I | Business Recorder. [online]
Available at: http://www.brecorder.com/articles-a-letters/s=:/1229768:pakistan-a-state-in-economic-
crises-i/?date=2012-08-23 [Accessed: 3 Dec 2014].

21. 21
Self Reflection
In this week I learned that how market runs and what is economy and how many types of economy
are?? Basically I was having problem in Mixed Economy that how it runs but after going through some
articles and information from internet I get the whole image of it .I also find difficulty in comparing the
economies of Pakistan and Briton because they both are different countries having different cultures,
Tradition and also having different political and economical system nut after going through some
research I compiled the whole information quite successfully. In my opinion Mixed Economy is best
because it also includes planned and free economy so it helps the government to maintain the profit
and runs the government successfully

22. 22
Week 3 ; Economics Influence on House Hold Purchases
Economic influences on household purchases
What is recession?
It is economic period in with output growth decline or become negative or the downturn remains in the
business activities for two-three continuous quarters. Recession badly affects the GDP of the country
that influenced the economic growth and development of the country.
Recession and Supermarkets
Recession caused the shrinkage in the market activities due to the high unemployment and inflation. In
six years period (2007-12), the disposable income of the consumer contracted below the inflation rate of
32%. Moreover recession changed the buying patterns that consumers either by live conservatively or
within their budget limits. They preferred to stay home by avoiding going to clubs, pubs, takeaways and
restaurants. According TNS Global and Nielsen market research, it said that during the recession about
4%-5% groceries sales were declined annually. Similarly, about 36% of the UK consumers decreased
their groceries purchases during the recession period.
Supermarkets Response to Recession
The large supermarkets in UK started different price promotional strategies to attract consumers from
the high-low market segments. These markets tried to fine out best market tool to erode market share
from those in business.
During the recession, customer loyalty programs were introduced by the big players in the business.
Leading from the front, Tesco launched Club card Loyalty scheme as aggressive market tool to regain the
lost market share. Owned labeled Price Promise comparison price voucher was also launched by Tesco
that consisted upon a basket of branded and non-branded items. The similar strategies were also
launched by others such as Morrison and Sainsbury’s.

23. 23
Article
Shopper behaviour as the UK exits recession
26 January 14:07 2010
Andy Wood, managing director of GI Insight, looks at consumer supermarket shopping behaviour during
the recession and asks what its effect will be now the UK is exiting recession.
There is little doubt that supermarkets have been weathering the recession rather well, with many
reporting strong profits and increased sales.
And, with a large proportion of consumers looking to avoid costly nights out and takeaways, many of the
big supermarkets have rushed to fill the void – the result being that, overall, the major chains have seen
their grocery sales lifted by 4-5% year-on-year in recent months, according to figures from market
research firms Nielsen and TNS Global.
Below the surface of these seemingly positive figures, however, there has been a significant underlying
shift that could be troubling for some segments of the retail grocery sector.
We surveyed a broad spectrum of consumers and found that more than a third of shoppers have
switched from their usual grocery supermarkets to ‘value’ retailers, as once-loyal customers look to trim
their household expenses by turning to cheaper alternatives.
This underlying shift has been occurring at different levels in the grocery sector and has become more
pronounced as the recession has progressed. Our latest figures show a higher proportion of people
moving to ‘value’ alternatives for the long term than a similar study conducted earlier in the year.
It found that 36% of UK consumers have gone down market with their grocery shopping for a significant
portion of their food purchases, in an effort to economise as the recession has dragged on.
The study also found that, now that the economic outlook is improving, only 10% of UK consumers plan
to move back ‘upmarket’ within the next year, representing a net loss for higher-end supermarkets of
26% in the longer term.
A similar study we conducted in May found a net total of 21% of shoppers had moved downmarket and
planned to stay there. The latest results indicate that, as the UK has continued to face a difficult
economic climate, more consumers who have moved to less costly alternatives are now beginning to
see this as a long-term solution.

24. The main beneficiaries in the retail grocery sector of this drive to economise have been those large-scale
supermarkets that have pushed everyday low prices, while some of the more basic bargain retailers
have also seen benefits.
At the other end of the spectrum, certain premium players have also benefited as they have successf ully
marketed own-label brands while encouraging customers to treat themselves to special luxury food
products to compensate for curtailed spending elsewhere.
A valuable tool in all of this retail grocery market turmoil is the customer loyalty programme. While
earlier in the year Tesco’s market share dipped in the face of consumers going downmarket looking for
better deals, the market leader has managed to turn things around and in November actually saw slight
year-on-year growth in its market share for the first time since the end of 2007, according to TNS
figures. This can largely be attributed to the aggressive prelaunch of Tesco’s Club card loyalty scheme.
In addition to leveraging their loyalty programmes, Tesco and high-end grocery chains such as Waitrose
and Sainsbury’s have been introducing budget ranges in a bid to stem customer churn – the essential
Waitrose range being a perfect example.
24
At the same time, value supermarkets have been using price promotions to try to attract more
customers away from the middle and high-end segments of the retail grocery market and keep those
who have already moved.
With certain players in the very top end and the bulk of competitors at the bottom segment of the retail
grocery sector thriving in very competitive circumstances, the supermarket chains and the independents
being squeezed in the middle now have to find the right tools to regain eroded market share and win
over consumers rethinking their shopping habits, as the UK exits recession.
Summary: Article
The research carried out by Nielsen and TNS Global has revealed that sales on the grocery at various
well known chains have increased by 4 to 5 % in few months. A consumer survey shows that about one
third of the costumers have switched from supermarkets to retailers. This switch has been observed at
different stages in the grocery sector and is found to become stronger as the recession increases. The
most recent study reveals that most of the costumers now see the long term solution of the economic
crisis as moving to cheaper alternatives. The grocery market needs to introduce effective customer
loyalty programs in order to keep their customers. Whereas, the value supermarkets need to work on
the price promotion and find right ways to get hold of the costumers.

25. 25
German economy succumbs to the slowdown
The country’s manufacturing sector is slowing and factory orders are tumbling, but it does not make
sense to write off Germany as an investment opportunity just yet
By Andrew Davis
3:54PM GMT 11 Nov 2014
Regarded as the Eurozone’s engine for years, Germany is no longer running so smoothly.
The country’s legendary manufacturing sector, which has made it the world’s third biggest exporter, is
slowing markedly – industrial output fell 4pc in August, the biggest month-on-month drop since
February 2009.
Factory orders also tumbled 5.7pc, suggesting the soft patch will continue for a while at least. German
consumers, meanwhile, are in cautious mood, with retail sales in September dropping by more than 3pc,
once again the biggest monthly decline since the credit crunch was at its worst.
All in all, it looks as if Germany is succumbing to the slowdown taking hold almost everywhe re, a notable
exception being the US. As a major exporter, Germany is exposed to weakness in other parts of the

26. 26
world – its major trading partners in the Eurozone are all experiencing slow growth and several are on
the brink of recession. It’s entirely possible Germany could dip back into recession this year.
Further afield, the huge Chinese market is cooling rapidly, which naturally damps demand for German
exports, while Russia is feeling the chill of international sanctions and suffering a currency collapse.
For investors, the German story is based on its excellence as an exporter and affluence of its domestic
market, both of which are now in question to some degree at least.
If world growth is slowing, as seems to be the case, Germany’s ability to continue exporting its way to
prosperity is going to be compromised. At home, meanwhile, the government’s determination to return
to a budget surplus in the near future means relatively little chance of any stimulus to boost domestic
demand.
It does not make sense to write off Germany as an investment opportunity – the quality of its
companies, not to mention the probability that the Euro will weaken further as a result of loose
monetary policy, make it a formidable exporter whose prowess is not about to disappear overnight. But
the Eurozone looks as if it will be on its knees for a while, so a lot will depend on how the wider world
fares.
That said, investors need to appreciate that the factors that fuelled Germany’s resurgence during the
noughties, in particular China’s years of 10pc growth, are receding into past and that means its
companies will need to find new avenues to pursue.
This is no disaster – it may be getting harder to sell top-of-the range BMWs to Chinese government
officials, but there’s little sign of Aldi and Lidl’s budget-shopping invasion running out of steam.
Summary: News
According to euro zone’s economy engine, Germany is facing trouble in the manufacturing sector which
was considered to be the backbone of Germany’s growing economy. Germany’s standard as the first -
rate exporter is now in question. Many of the Euro Zone trading partners of Germany are facing
economic crisis and are expected to be the victim of recession. This makes Germany vulnerable to
recession in the present year. Yet, it is not appropriate to say that Germany is not a profitable
investment venue. The quality of German companies is so to make it such a dreadful exporter whose
decline is not a story of few days.

27. 27
Bibliography
Talking Retail. 2010. Shopper behaviour as the UK exits recession. [online] Available at:
http://www.talkingretail.com/opinion/talkingpoints/shopper-behaviour-as-the-uk-exits-recession/
[Accessed: 3 Dec 2014].
Telegraph. [online] Available at:
http://www.telegraph.co.uk/sponsored/finance/macroeconomics-investment/11215692/germany-economy-
slowing.html?WT.mc_id=605804&source=TrafficDriver [Accessed: 3 Dec 2014].
Mediatel.co.uk. 2014. How shoppers and supermarkets are responding to the recession. [online]
Available at: http://mediatel.co.uk/newsline/2013/03/28/how-shoppers-and-supermarkets-are-responding-
to-the-recession/ [Accessed: 3 Dec 2014].
Talking Retail. 2010. Shopper behaviour as the UK exits recession. [online] Available at:
http://www.talkingretail.com/opinion/talkingpoints/shopper-behaviour-as-the-uk-exits-recession/
[Accessed: 3 Dec 2014].

28. 28
Self-Reflection
In this week I learned about cost of production, monopoly, Oligopoly and I also learned about recession
and how companies goes through it and what are the reasons for recession and how companies manage
through it .What are impact of recession on the country and market and how the country manage to get
rid of it.I was having a little problem in understanding about recession but after consulting my tutor I
learned it .According to me when there is recession we peoples or ci tizens should not take our money
out of our bank accounts . if we will do this we will go further in recession because banks will have no
money to invest so definitely that particular country will go into recession

29. 29
Week 4 ; Credit Creation
Credit Creation
Creation of credit is an important function of a commercial bank. Money deposits in the commercial
bank have provided investment opportunities for the bank. It is supply of money from the bank which
increases the money circulation in the economy. Thus credit creation by the bank is said to be the
multiplication deposits. The central bank always keeps a close eye on the supply of money to avoid
inflation.
Process of Credit creation
Commercial banks use different methods for credit creation in the economy. Credit creation is process
of advances money in form of loans and investments which further expand the deposits of the bank.
Therefore, if someone deposits money in bank then bank would perform multi-expansion of credit while
withdrawals of money create multi-contractions of credit. Most common method of credit creation is
keep say 20% reserve ratio of deposited money ($1000*20%=200) and advance $800 in form of loans.
This process is repeated by other banks to create credit in the financial sector. Today’s popular source of
credit creation is plastic money such as credit cards.
Credit cards advertised benefits and annual payment rate (APR)
Citi. Diamond Preferred Card Standard Chartered Platinum Visa/MasterCard
1% unlimited cash back and 0% interest on first
0% interest rate up to 18months
$3000 withdrawal
APR-24.455% APR- 11.99% to 21.99%
Minimum Payment rate:
2% or $50 whichever is higher on outstanding
balance
Minimum Payment rate:
$5 or 3% whichever is higher on outstanding
balance
24/7 dinning, shopping and travelling 24/7 dinning, shopping and travelling
1000 pounds= $1564.45
Minimum payment (1564.45*2%)=$31.29
Each month paying $50 will take 50months with
total interest $917.43 to get rid off of debt
1000 pounds= $1564.45
Minimum payment (1564.45*3%)=$46.93
Each month paying $46.93@ 20% APR will take
98months with total interest $643.41 to get rid
off of debt
Most favourable for me.
Payday Loan:
Sunny.co.uk
The company provides online loan facilities for the short term up to the maximum of one month. Usually
APR on these payday loans are high due to the high risk bearing by the company. The sunny payday APR

30. 30
is 1751% a massive interest rate. They don’t charge late fees but its payment quite high than a normal
credit card APR 20 to 25%. Credit card option is better than payday loan because;
It gives protection on the consumer purchase
There is no interest to pay on the daily basis
It is cheap and for long term
Fair pricing
Flexibility in borrowing and repayment

31. 31
Article
Soaring UK personal debt wreaking havoc with mental health, report warns
Centre for Social Justice says poorer people 'bearing brunt of storm' as debt hits £1.4tn – almost as high
as economic output
Credit card debt has trebled to £55.6bn since 1998 while overall personal debt including mortgages has
reached £1.4tn. Photograph: Alan Schein Photography
Personal debt in Britain has reached £1.4tn – almost the same amount as Britain's national economic
output – according to a report that warns debt is wreaking havoc on people's mental health and
wellbeing.
Poorer people are "bearing the brunt of a storm" during which average household debt has risen to
£54,000 – nearly double what it was a decade ago, the report by the Centre for Social Justice thinktank
warns.

32. The report, entitled Maxed Out, found that almost half of households in the lowest income decile spent
more than a quarter of their income on debt repayments in 2011. More than 5,000 people are being
made homeless every year as a result of mortgage or rent debts.
Christian Guy, director of the think-tank established in opposition by the work and pensions secretary,
Iain Duncan Smith, said: "Problem debt can have a corrosive impact on people and families. Our report
shows how it can wreak havoc on mental health, relationships and wellbeing. Across the UK people are
up until the early hours worrying about their finances and bills."
32
The report, written by the former Labour work and pensions minister Chris Pond, found that:
• Personal debt in the UK, including mortgage lending, stands at £1.4tn – an average of £54,000 per
household compared with £29,000 a decade ago.
• Consumer debt had trebled since 1993 and now stands at £158bn;
• More than 8m households have no savings, including half of low-income households;
• Outstanding debt on credit cards has almost trebled since 1998 to reach £55.6bn;
• There were 300,000 arrears on mortgage in 2012 – with 34,000 homes repossessed. This is a reduction
of 30% from the peak of the recession but a 60% overall increase since 2006.
Pond said: "With falling real incomes and increasing costs of basic essentials, many – especially the most
vulnerable – are sliding further into problem debt. The costs to those affected, in stress and mental
disorders, relationship breakdown and hardship is immense. But so too is the cost to the nation,
measured in lost employment and productivity and in an increased burden on public services."
The report found that the decision of mainstream banks to refuse credit to the less well-off has led to a
dramatic increase in the demand for short-term credit – from payday lenders, pawnbrokers and
doorstop lenders – which is now worth £4.8bn a year. More than 1.4 million people have no access to a
bank account and "are effectively excluded from the entire financial sector". This contributes to the
"poverty premium", a £1,280 annual surcharge on everyday goods and services faced by low-income
households.
Payday lenders have increased their business from £900m in 2008-09 to more than £2bn – accounting
for around 8m loans – in 2011-12. The number of people resorting to loan sharks has increased to
310,000 people.
The report says: "For the most financially excluded, there is often no option but to turn to illegal
moneylenders. It is estimated that over 310,000 people borrow money from these criminals each year.
Illegal moneylenders extort money from their victims, often arbitrarily raising interest rates, demanding
payments or charging penalties. Their use of violence and intimidation terrorises people and
communities, enforcing a 'veil of silence' that allows them to escape detection. This is an inexcusable
crime in modern Britain.

33. 33
Many of the side effects of problem debt can also work to drive people further into debt, creating a
vicious cycle. While it is often hard to prove causation, there is a clear relationship between the
following and problem debt: unemployment, family breakdown, addiction, and poor mental health.
Similarly, many of these factors are interrelated, meaning problem debt can have diverse causes,
requiring multidimensional support in order to fully resolve the underlying problems."
SUMMARY: Article
A report of the mental health says that debt has a devastating effect on person’s mental health.
Household debt in Britain has become double the amount it was a decade before. Report says that as a
consequence of mortgage or rent debts, hundreds of people become homeless every year. Mostly,
financially instable people tend to get involved in illegal activities and seek help from moneylenders,
who exploit their victims in every possible way. Debt problem has a direct relationship with other issues
like unemployment, broken relationships and addiction. In order to eliminate debt issues, the above
mentioned related problems must be address properly.

34. 34
Article
Weak global economy weighs on Britain's blue-chips
Sales at FTSE 100 companies slumped in the second quarter due to weak global demand and a strong
pound -- while FTSE 200 firms, with less international exposure, fared better
By Lauren Davidson
5:00AM GMT 10 Nov 2014Sales slumped at Britain’s blue -chip businesses in the second quarter of this
year, after weak global demand and a strong pound weighed on earnings.
However, London-listed medium-size companies, which are less exposed to external markets, fared
better, pointing to the strong growth of the UK economy relative to its international counterparts.
Revenues at FTSE 100 companies fell 5.8pc to £61.9bn in the three months to the end of June,
compared to the same period last year, according to the latest Profit Watch UK report from The Share
Centre, the stockbroking service.

35. Sheridan Adman’s, investment research analyst at The Share Centre, said, “The news on the global
economy, and among Britain’s big trading partners, is not good, which is likely to keep the pressure on
UK plc.
“However, in the year ahead, there is likely to be less of a drag from the high pound, and the domestic
economy is still growing. We think earnings are likely to be better than some fear and the market
continues to present good opportunities to invest.”
BHP Billiton and Diageo, two of the biggest companies to report in the quarter, took a toll on the FTSE
100’s performance, after shrinking commodity prices and a particularly strong pound prevented the
companies from reporting an earnings increase in sterling.
BHP is trading 10pc lower than it was at the start of 2014, while Diageo has lost almost 9pc of its
value.
But the recovery of the UK economy helped boost sales at FTSE 250 companies, which are less exposed
to the global market, by 11.3pc to £32bn, with net profits growing by 28.5pc to £2.2bn.
35
Property and construction sectors fared particularly well -- together contributing more than £2bn in
sales -- due to the boom in the UK housing market.
The UK economy expanded by 0.8pc in the second quarter of this year, rising, largely due to strong
growth in the services sector. GDP rose by 3.1pc on an annual basis, its fastest pace of growth since late
2007.
By comparison, the European Commission last week cut its 2015 growth forecasts for the Eurozone
from 1.7pc in May to 1.1pc. The growth forecast for Britain was revised upwards from 2.5pc to 2.7pc.
Overall, revenues across the FTSE 350 increased by 1.6pc to £93.9bn, with net profits up 12.5pc to
£14.1bn due to fewer write-downs and lower tax bills.

36. Profit Watch UK analyses annual financial data from the FTSE 350 companies with year-ends before 30
June and which report earnings before the end of September, to provide an overview on the state of UK
plc. This year’s second-quarter report includes financial results from six FTSE 100 firms and 24 from the
FTSE 250.
36
Summary: News
Blue chip businesses in Britain had to face sales downfall resulted from strong pound and weak global
demand. On the other hand, medium sized companies in London having a little exposure to
international market fared well. According to Sheridan Adman’s, who is an investment research analyst
at The Share Centre, UK plc is going to be under pressure; however, the coming year may bring some
good investment opportunities by the market. In the second half of this year, well grown services sector
helped UK economy to rise by 0.8pc. An upward revision is made in the growth forecast for Britain.

37. 37
Bibliography
Watt, N. 2013. Soaring UK personal debt wreaking havoc with mental health, report warns.
[online] Available at: http://www.theguardian.com/money/2013/nov/20/personal-debt-mental-health-
report [Accessed: 3 Dec 2014].
Davidson, L. 2014. Weak global economy weighs on Britain's blue-chips - Telegraph. [online]
Available at: http://www.telegraph.co.uk/finance/markets/11219398/Weak-global-economy-weighs-
on-Britains-blue-chips.html [Accessed: 3 Dec 2014].
Which.co.uk. 2014. Six reasons why credit cards beat payday loans - February - 2012 - Which?
News. [online] Available at: http://www.which.co.uk/news/2012/02/six-reasons-why-credit-cards-beat-
payday-loans-278639/ [Accessed: 3 Dec 2014].
Sunny.co.uk. 2014. Sunny Rates: Transparent and Fair Pricing - Sunny. [online] Available at:
https://sunny.co.uk/our-loan-pricing [Accessed: 3 Dec 2014].

38. 38
Self-Reflection
In this week I learned about how banks or companies runs their business by making their
customers fool. I also learned about the different between types of accounts in banks e.g.
differences between visa card, credit card and debit card and how through these accounts
banks like Barclays,HBC etc. Make money and how companies like Tesco, Morrison’s etc.
make money by their Tesco club card .I also learned about the way they make money by giving
loans and by their interest rate each and every bank and company have their own interest rate. I
was having problem with interest rate table but after requesting my tutor for explaining me again
I understand the whole phenomenon. According to me I will never take any loan from any bank
or company because it increase day by day.

39. 39
Week 5 ; Financial Institutions
Financial institutions
World Bank
The foundation of World Bank was laid down in 1945 at Bretton Woods conference. It is the UN
international financial institution that facilitates the poor countries by providing long term loan for the
strengthening the capital structure of those economies. The other objectives include poverty elevation
programs, promotion of international trade and foreign investment in developing and developed
nations.
European Central Bank (ECB)
The head office of European Central Bank is at Frankfurt, Germany. It manages the entire euro region of
European System of Central Banks that consisted upon 28 countries. The important role of ECB is to
regulate the financial system and price stability of the EU member countries. The ECB functions include;
Promote co-operations among 18 countries of Euro-Zone and safeguard the euro economic systems.
Bank of England
It is the central bank of the UK. It was founded in 1694 which is located at London. The Bank of England
played a pivotal role in economic safeguard of the country. The macro & micro agents of the financial
market is regulated by the Bank of England. It main functions include;
Supervise the Government financial dealings
Regulate the financial market with monetary policy
Issue currency notes and coins
Keep foreign exchange and gold reserves
Crowd Funding Websites
Crowd funding via web is a quick and easy fund raising sources where many companies or investors
reading to provide funds. Funds are available on the collaboration sources for the new business start ups
and for expansion of the business. Following are two renowned crowd funding websites. There is two
types’ crowd funding categories.
Donation base funding
Investment base funding
Crowd funder Inc.

40. 40
The website Crowdfunder.co.uk provides funds in many categories including, Business, community,
environment, sports, school and film and theatre. The process for the funds raise is very easy and
personalizes. The company delivers their services very successfully.
The company provides many promotions tips to the investors and entrepreneurs
The project owner can updates the work of his new projects with company experts
The local press portrays the success stories of the many funds raisers
One can promote his projects on the company’s web pages on social sites
The crowed also include the press and media as BBC and guardian
Crowd cube Capital Limited (crowdcube.com)
This is the longest websites that provides funds to the small business to the large companies. It provides
funds on different terms to the fresh entrepreneur in the market and giving advice on request for the
success. The funding site allows small business to investment for future expansion through large firms.
Moreover, businesses can avail investing opportunities, raise finance and also invest money in the
equity shares of the large public limited companies.
Different articles about the success stories of the crowdcube.com can be found in the world’s most
renowned new papers.
It include Sunday times, express, Wall Street Journal and many more
Since 2000, company noticeable investment stake are in MYSQL, YOOX Group, LOVEFILM and Natural
Motion
It also funded 400 Private with the investment of 1.8M Pounds.

41. 41
Schumpeter
Business and management
Crowd funding start-ups
Herding investors
Nov 27th 2013, 12:30 BY C. S.-W
IN 2005 Venky Harinarayan and Anand Rajaraman, two venture capitalists, were approached with an
offer by Sean Parker, the founder of Napster, once the internet’s biggest music-sharing service. In
exchange for a small amount, they would be given a stake in a new start-up run by one of Mr Parker's
associates. They took him up on the offer. Today they still own their shares in Facebook, and are much
the richer for it.
The story of Messrs Harinrayan and Raja Raman is rare, but it does not stop some dreaming of a
prescient ground floor investment in a company about to crest a wave of popularity. A growing number
of websites on both sides of the Atlantic feed that dream by offering would-be venture capitalists the
ability to chance their hand. Because of differences in regulation, however, British crowd funding sites
got an early start (in America soliciting such investments from the general public has only recently
become legal, and not all regulatory problems have been worked out). To capitalise on their advantage
Britain’s crowd funders are now going international.

42. Seders is one such business. Launched in July 2012 the site initially offered investors the chance to put
their money in Britain-based start-ups. This week it announced its expansion into Europe: it now also
allows continental investors and entrepreneurs to use its platform. To be able to add momentum to this
move, it is reaching out to investors via its own platform for the first time, hoping to raise £750,000
($1.2m) for a 12, 66% stake.
If it does not raise money for itself, Seders takes 7.5% of each successful funding round sourced from its
crowd of investors. Nearly 50 start-ups have raised £3.7m in funding. The typical backer is a tech-savvy
professional in his 30s or 40s, says Jeff Lynn, Seders' chief executive, but recent graduates looking for a
nest egg and retirees hoping to boost their pension pot also support start-ups.
Crowd cube, another British crowd funding service, announced last week that it has forged a technology
partnership with a site in Italy, adding to similar deals it already has sealed with firms in New Zealand
and Spain. In Britain Crowd cube has helped 81 businesses to raise nearly £16m, taking a fee of 5% of
the amount invested. The average investor stumps up £2,500 for his stake. Most of the start-ups funded
through the platform are based in the south of England; only a solitary Scottish start-up has won over
backers. Four in five start-ups that seek support fail to raise enough interest, demonstrating that Crowd
cube’s users are discerning with their money.
Both platforms are regulated by the Financial Services Authority, ensuring that investors' cash does not
disappear. And both are middlemen: they bring an audience to the product, and the product to an
audience. But whereas Crowd cube introduces investors to investments and moves on, Seders manages
the investments on behalf of its users until the firm is sold, goes public—or belly up.
Both services owe a debt to kick starter, a crowd funding site on which backers are rewarded with gifts
(a CD, a book, or a magazine) or early access to the products they support, rather than a share in a
company. Those backing a Kick starter campaign expect only a finished item, though. Those funding
start-ups may want to have a say, even if their investment is small. Nearly 80 people invest in the
average project that passes through Crowd cube. Getting them to sign the papers, for instance when a
start-up wants to raise real venture capital may be hard. The risk is that crowd funding today may mean
herding cats tomorrow.
42
Summary: Article
Crowd funding is growing rapidly, providing the venture capitalists with the opportunity to take a
chance. There is large number of crowd funding websites worldwide. However, British sites started off
quite early as compare to recently establish American sites that are still facing legal challenges. Seedrs
which is a crowd funding site launched in 2012 started with giving investors the opportunity to invest
only in British start ups is now going to expand in Europe. So the British crowd funders will now enjoy
investing in international businesses. Another British crowd funding site, Crowd cube has announced its
partnership with Italy. Financial Services Authority is regulating these sites for the protection of
investor’s money.

43. 43
Article
Save money and time on your international currency transfers
For great exchange rates, low fees and expert guidance make your international payments with the
Telegraph International Money Transfer Service
3:12PM GMT 03 Nov 2014
There are many reasons why you may want to send money overseas. Perhaps you are buying a holiday
home abroad or you’re planning to retire to sunnier climes as the dark days of winter draw closer.
If you already have an overseas home you may need to pay a foreign currency mortgage or household
bills. Alternatively, you could need to transfer funds to pay school or university fees.
Before transferring your funds overseas, make sure you are getting value for money with a great
exchange rate and low fees by using a foreign exchange specialist such as the Telegraph International
Money Transfer Service, which is run in partnership with monocarp.
For most people, the first port of call when making an international payment is their bank. But high-street
banks typically don’t offer the most competitive exchange rates. The Telegraph International
Money Transfer Service typically beats the rate you’ll receive from high-street banks by 3-4 pc. With
large sums, this makes a real difference – on a transfer of £100,000 it could mean an extra £4,000 in
your pocket.

44. But the saving doesn’t stop there. The transfer fees are low too. Banks typically charge £20 to £40 each
time you move money abroad, whereas the Telegraph International Money Transfer Service only
charges £4 for an online transfer and a maximum of £10 when you place an order over the telephone.
And, as a Telegraph reader, your first transfer will be completely fee free.
44
For anyone sending money overseas on a monthly basis, the lower fees mean you can save up to £432
over the course of a year. This could pay for flights to visit friends and family living abroad or to go to
stay in your holiday home.
Foreign currency rates are changing all the time – often quite rapidly. On September 10, in the run-up to
the Scottish referendum, a pound bought €1.24. Just three weeks later, on September 30, the pound
reached a new two-year high against the euro of €1.28. That makes a difference of €20,000 on
exchanging £500,000 in just 20 days.
By using the Telegraph service you’ll have access to expert guidance from monocarp’s account
managers, who keep a constant watch on the currency markets. They can provide information about a
‘forward contract’, which allows you to lock into an exchange rate for a period of up to two years . So if
you don’t need to make your money transfer immediately, you can be sure you don’t get caught out if
the markets move against you.
If you buy a house or move abroad, it is likely that you may have to make regular overseas payments to
transfer your pension or to pay a mortgage or local bills. In this case, it’s worth considering the regular
payment plan. Once set up, scheduled payments are made automatically and, as with a forward
contract, the exchange rates can be fixed for 24 months. This helps you budget and protects you should
the exchange rate move against you.
Monocarp started trading currencies in 1979 – last year it traded £10 billion in 100 different currencies.
They are authorised and regulated by the Financial Conduct Authority for the provision of payment
services, so you can rest assured that your money is in the safe hands of experts. All clients who make a
trade will be sent a monocarp Star card, which is an exclusive reward card. It gives members the
company’s best online exchange rates for travel money, which can be picked up at the airport or in its
London branches without any advance warning.
Summary: News
Telegraph International Money Transfer Service provides you with the best money exchange service.
There may be a lot of reasons for transferring money overseas. Telegraph service which works in
collaboration with moneycarp offers money exchange at lowest fee. Most of the people use banks for
sending money overseas but exchange rates offered by banks are too high. Telegraph service gi ves you
exchange rates better than those offered by banks. Telegraph’s service provides you with an
opportunity to have guidance of account managers from monocarp regarding the currency market.
Trading with monocarp will give you the reward of a monocarp Star card which will help you to take
advantage of lowest money exchange rates.

45. 45

46. 46
Bibliography
The Economist. 2014. Herding investors. [online] Available at:
http://www.economist.com/blogs/schumpeter/2013/11/crowdfunding-start-ups [Accessed: 3 Dec
2014].
Telegraph.co.uk. 2014. Save money and time on your international currency transfers -
Telegraph. [online] Available at: http://www.telegraph.co.uk/financialservices/money-transfer-and-
expat/foreign-ex-and-money-transfer/11205511/Save-money-and-time-on-your-international-
currency-transfers.html [Accessed: 3 Dec 2014].
Worldbank.org. 2014. World Bank Publications and Documents. [online] Available at:
http://www.worldbank.org/reference/ [Accessed: 3 Dec 2014].
Yourarticlelibrary.com. 2014. World Bank: its Objectives and Functions. [online] Available at:
http://www.yourarticlelibrary.com/economics/world-bank-its-objectives-and-functions/23534/
[Accessed: 3 Dec 2014].
Europa.eu. 2014. EUROPA - European Central Bank. [online] Available at:
http://europa.eu/about-eu/institutions-bodies/ecb/index_en.htm [Accessed: 3 Dec 2014].
England.mu. 2014. The important role of the Bank of England. [online] Available at:
http://www.england.mu/articles/bank-england.html [Accessed: 3 Dec 2014].

47. 47
Self-Reflection
In this week I learned about the types of banks and their banking system.e.g investment banks,
commercial banks and retail banks. And what are their uses and how they help the local community.
What is the difference between Central Bank of UK and other banks and what are the functions of each
and every bank and how they make money. This week was a little bit easy for me because I was on time
in class so I carefully listened the whole lecture also learned that in recession time when all other banks
are collapsing Central bank which is the government bank helps the other bank by providing the loan on
interest and they also generate money to overcome recession and its Central Bank which balance the
whole economy of the whole country. If the amount of money start increasing in the country they
produce less money to stay in equilibrium.

48. 48
Week 6 ; Investments
Investments
Alternation Investment Market (AIM)
AIM is the part of the London Stock Exchange which provides opportunities to small -medium companies
to raised equity capital for future expansion. It allows the companies to make its fortunes by accessing
the global equity markets, investors and sectors of the world’s leading corporations. A IM played a
significant role by providing small-medium enterprises to raise capital for expansion. About 3000
companies are trading under the AIM. It consisted upon the FTSE-50, FTSE-100 and FTSE all index
indices.
Advanced Computer Software Group PLC (AIM FTSE-100 index)
Company Profile:
The company business activities are consisted upon software, health and IT services. There are total
2000 employees in the company who deliver quality services to different organizations to enable them
to achieve high growth with lower costs. The company’s sales turnover has been increasing for the last
five years and reached to £203m. The company is also awarded as 13th largest company among other
listed companies on AIM.
Sales turnover is increased about 68% between 2013 and 2014 which boost up the pre-tax profits by
32% from £9.2m to £12.1m. The strong financial performance further strengthens the earning per share
(EPS) of 18% between the two years. The details of the company price movements for the last four
weeks are given as follows.
Date Open Close Volume
1 Dec 2014 (Mon) 140.00 139.50 1,185,697
28 Nov 2014 (Fri) 139.50 139.50 2,779,658
27 Nov 2014 (Thu) 138.50 139.00 8,369,787
26 Nov 2014 (Wed) 138.00 138.75 25,470,308
25 Nov 2014 (Tue) 138.25 138.00 123,307,694
24 Nov 2014 (Mon) 118.75 119.75 1,004,679
21 Nov 2014 (Fri) 120.00 120.00 481,465
20 Nov 2014 (Thu) 119.50 119.00 740,083
19 Nov 2014 (Wed) 117.75 119.00 334,476
18 Nov 2014 (Tue) 118.50 118.50 271,812
17 Nov 2014 (Mon) 119.50 119.25 379,214
14 Nov 2014 (Fri) 117.25 119.00 3,730,703
13 Nov 2014 (Thu) 113.50 118.75 489,797
12 Nov 2014 (Wed) 114.50 115.00 331,398

49. 49
11 Nov 2014 (Tue) 110.25 113.50 230,198
10 Nov 2014 (Mon) 109.00 113.50 196,970
7 Nov 2014 (Fri) 112.00 112.75 219,086
6 Nov 2014 (Thu) 107.00 111.00 1,204,624
5 Nov 2014 (Wed) 106.75 107.00 933,526
4 Nov 2014 (Tue) 108.00 106.75 898,1533
Comments:
The share price movement of the company is favorable in the context of the business sector. The above
summarized ups and downs in the share price along with turnover. If we analyze the data in the past
four weeks the normal changes has occurred because of the company’s sales turnover showed favorable
trends.
London Stock Exchange (LSE)
LSE is the UK main stock market where large publically listed companies trading on different indices. It is
the world’s biggest stock market. It has certain financial requirement for the companies to join to
increase their visibility towards the global market. The primary role of LSE is to provide well efficient
capital market for brokers and investors. The trading data on LSE send towards 100 destinations in the
world. The indices on the LSE are consisted on FTSE-100, FTSE-250 and FTSE-350.
Aberdeen Asset Management PLC (LSE-100 Index)
Company Profile:
It is an international investment management group that facilitates retail and institutional business
around the globe. The company provides professional services to these companies to get large market
share in their respective sectors.
According to annual report 2014, company has shown net revenues growth of 4% as compared to 2013.
The total sales in 2014 (£1,117.6 million) as compared to 2013 (£1,078.5 million) were recorded. The
increasing trend in sales increased the before-tax profits by 2% between 2013 and 2014. The assets
management is increased between 2013 and 2014 by 62%. Similarly the diluted price per share was
31.1p as compared to 32.5p in 2013. The total human resource of the company is consisted upon 1800
distinguished employees. The summery of the share price movements for the last 4 weeks are given in
the following table.
Date Open Close Volume
1 Dec 2014 (Mon) 448.40 457.50 7,545,151
28 Nov 2014 (Fri) 454.60 449.90 7,837,869

50. 50
27 Nov 2014 (Thu) 454.40 455.80 2,403,476
26 Nov 2014 (Wed) 458.20 453.40 4,324,387
25 Nov 2014 (Tue) 453.30 457.70 3,331,778
24 Nov 2014 (Mon) 454.40 454.20 2,274,734
21 Nov 2014 (Fri) 449.90 455.20 7,873,276
20 Nov 2014 (Thu) 440.00 446.40 2,419,328
19 Nov 2014 (Wed) 448.30 444.80 1,991,269
18 Nov 2014 (Tue) 445.90 447.90 2,662,380
17 Nov 2014 (Mon) 439.00 443.80 2,289,498
14 Nov 2014 (Fri) 432.30 441.60 3,499,915
13 Nov 2014 (Thu) 429.10 432.30 2,972,770
12 Nov 2014 (Wed) 434.30 426.90 8,927,064
11 Nov 2014 (Tue) 451.70 446.00 3,640,516
10 Nov 2014 (Mon) 443.90 451.10 2,104,877
7 Nov 2014 (Fri) 448.90 442.70 2,826,441
6 Nov 2014 (Thu) 439.80 447.20 3,894,787
5 Nov 2014 (Wed) 432.10 442.00 5,984,471
4 Nov 2014 (Tue) 429.70 430.50 3,538,343
3 Nov 2014 (Mon) 432.90 430.40 2,414,274
Comments:
The company’s business segments are large so, as the turnover of sales has been showing upward
trends. There are normal changes occurred in the share price movements of the company. It is because
of the company revenues contributions of 128% in total revenues from business services along with
other two segments A beginner's guide to investing in the stock market
Feature by Cathy Adams (May 1st, 2013).

51. 51
A beginner's guide to investing in the stockmarket
Last updated: May 1st, 2013 Feature by Cathy Adams
To a beginner, the stock market can appear a rather daunting experience. But in reality, with dismal
returns on offer from banks and building societies, investing in shares provides an opportunity to hedge
against rising inflation and achieve greater returns.
The basics
In the UK, the main stock market is the London Stock Exchange, where public limited companies and
other financial instruments
The stock market is split into different indices - the most famous in the UK being the FTSE 100,
comprised of the largest 100 companies. The most well -known indices come from the Footsie group -
the FTSE 100, the FTSE 250, the FTSE Fledgling and the alternative investment market (AIM), which
lists small and venture capital-backed companies.
Unlike cash, the stock market is not a risk-free investment. It has its ups and downs, however, with the
main index FTSE 100 returning 13.59% over the past year to 18 July, it has beaten any savings account
hands down.
Investing directly
There are two ways to access the stock market: directly, and indirectly. Although 'directly' is a misnomer
- investing in the stock market is always done through a third-party broker - direct investment means
buying the shares in a single company, and becoming a shareholder.
There is a wide range of broker services available. Some offer bespoke services and tailored advice, such
as Charles Stanley, Redmayne Bentley and Killik & Co, whereas others are nothing more
than execution-only share dealing services.

52. 52
Pick the right stocks and shares ISA for you
These are online platforms through which a client can buy and sell shares independently through a share
dealing account, without being offered advice.
Examples of these include Interactive Investor, Hargreaves Lansdowne or The Share Centre.
"For beginners who want to be more involved and dabble with individual shares, it makes sense to open
an online, execution-only share dealing account which keeps the cost of investing to a minimum," says
Martin Bamford, managing director of Surrey-based IFA Informed Choice.
Reading the financial press can be useful in terms of choosing which shares to buy, Bamford adds.
"There are also plenty of internet forums where share tips can be found. Don't part with your money to
receive share tips, as there is plenty of useful information in the public domain free of charge.
"Stick to companies you find interesting and spend the time researching a company before you invest."
Money Observer is a good place to start, as it lists the full performance, along with yield and
price/earnings ratio, of shares listed on the major FTSE indices each month; as well as performance for
funds, trusts and exchange traded funds - more on those later.
Investing indirectly
An indirect approach is a more common way of accessing shares, as it spreads risk by investing in a
number of companies. This can be done via an open-ended fund, such as an open-ended investment
company (OEIC) or unit trust, which is made up of shares typically from between 50 and 100 companies,
and can be sector, country or theme specific.
Money in these funds is ring-fenced away from the fund provider, so if the firm defaults, the money is
still safe.
An investment trust is another pooled investment, but it is structured in the same way as a limited
company. Investors buy shares in the closed-end company, and it is listed on an index in the same way
as a company such as Tesco or RBS. Trusts are less numerous than funds, but often cheaper.
"Beginners are best suited to using collective investment funds to access the stock market," adds
Bamford. "This enables them to use the collective buying power of a fund to reduce charges on a small
starting portfolio. They also get access to a professional fund manager to buy and sell individual
stocks, rather than having to make these decisions on their own."
While investment funds and trusts are actively managed products, run by a fund manager who
handpicks stocks and has some direction over the performance of the fund, an exchange traded fund
(ETF) is a passive product. ETFs are vehicles that simply track an index such as the FTSE 250. As index-linked
products, they can access almost every area of the market.

53. 53
ETFs are far cheaper than funds or trusts, as there is no active manager to pay for. However, as they
simply track an index, if the index falls spectacularly, so will your investment.
All the investment vehicles described above can be accessed through a broker or fund platform, directly
through the asset manager or through a wrapper such as a stocks and shares ISA.
How to find a financial adviser
As for more complicated investments, Bamford has some words of advice for beginners: "Leave spread
betting and day trading to the professionals, as these can be high-risk ways of investing money."
He adds: "When you are getting started, it makes real sense to buy blue-chip company shares on the LSE
and hold them for several months. Regular trading will kill profits quickly, with the cost of buying and
selling shares exceeding the returns you can make from a small starting stake."
A fund-of-funds or a multi-manager fund, which is a single fund investing in a range of others, can be a
good starting point for novices as it demands little involvement from the investor.
"It's proactively managed and investors can choose a risk profile which suits them, so they are secure in
the knowledge that the investments are in line with their expectations," says Peter Chadbourn, founder
of Colchester-based IFA Plan Money.
However, these types of funds are more expensive than investment trusts and funds.
What to be aware of
There are several things that investors should be aware of before committing any money to the stock
market.
"As a starting point, you need to decide what you want to achieve, how long you are planning to invest
for and how much risk you are prepared to take," says Patrick Connolly, certified financial planner at
AWD Chase de Vere, "as this will help you decide which investments are appropriate".
Tales of other people's huge gains can be tempting, but the market won't always go in your favour and
you must be prepared to see your investment drop as well as fall. "You must understand your tolerance
to risk rather than appetite for reward. Risk and reward go hand-in-hand, and any investor must
consider the potential downsides before investing," says Chadbourn.
"Secondly, investors must understand the structure of the investment: look at the fund factsheet rather
than the glossy marketing material," he comments. "The factsheet will tell it warts and all, rather than
what the company wants you to see."
The costs involved in buying funds, trusts, shares or ETFs can vary massively, and higher fees can easily
eat away at future returns. To ensure value for money, Chadbourn highlights the importance of
comparing charges on different products. "By buying directly from a fund supermarket, you'll benefit
from reduced initial charges on funds, as compared to a big retail outlet like a bank."

54. That said, discount supermarkets and execution-only brokers don't offer advice, so for a novice investor,
it may be better to seek some proper, independent advice from a financial adviser before making any
investment decisions.
54
How to cut the cost of investing
Without the help of a crystal ball, timing the market is impossible. Instead, look to invest regular
premiums on a monthly basis rather than a depositing a lump sum into a fund. By drip-feeding money
in, it's possible to negate the risk of market timing - if the market falls, the regular premium will simply
buy shares at a cheaper price the following month.
"Don't get swayed by investments just because they are at the top of the performance tables," warns
Connolly. "Strong recent performance should be seen as a warning sign, as the investment gains have
already been made, rather than as an opportunity to buy."
The final key point is that investments should be held for at least five years to smooth out any bumps in
the market, but that doesn't mean once they're bought they can be left unchecked.
Connolly concurs: "Review investments every six months to ensure they are performing in line with
expectations. If they aren't, try and understand why and then look to make changes if appropriate."
Summary: Article
The favorable investment trends in the stock market are more fruitful than the investment in money
markets. The investors in any market concerned with high potential outcomes. The stock market in the
UK is comprised on London Stock Market (LSE) and alternative investment market (AIM). Large public
limited companies are trading on the LSE and AIM dealt with small and venture traded companies.
Trading on the stock market is also having volatile investment conditions as up and down trends in the
money market.
Investment in Stock Exchange
The new investors should follow some guidelines that are prescribed by different experts and investing
firms to avoid unfavorable returns. There are two ways of investment in the stock market; directly and
indirectly. The direct trading includes Contact broker firms, share trading account, money observer,
investor forum and financial press news. Similarly, indirect trading utilizes, open-ended investment
company, close-end investing trust and exchange traded fund (ETF).
Precautions
According to investment experts, the new trader on the stock market should aware of the capital market
win-lose situation. The investor should study the experiences of people, structure of the investment,
charges of buying and selling, stay for long period of time and check the listings on the stock market for
at least six months.
Hidden investment costs are "a national scandal"

55. 55
News by Laura Whitcombe (Nov 17th, 2014).
Hidden investment costs are "a national scandal"
Last updated: Nov 17th, 2014
News by Laura Whitcombe
Pension savers and investors are being "exploited" as part of a
"national scandal" that sees investment costs concealed, according to a leading campaigner.
People investing in funds directly or through their pensions and stocks and shares Isa’s have little idea of
the true costs of doing so, research by the Financial Services Consumer Panel (FSCP) has confirmed.
Commonly cited measures such as the annual management charge (AMC) may account for just a
quarter of the true costs investors really face "as many of the charges are deducted directly from the
fund and remain hidden", it said in its latest discussion paper.
The panel points out that this is a problem that has serious consequences for investors, citing the
example previously given by the Department of Work and Pensions that an AMC of 1.5% a year reduces
a final pension pot by 22% after 40 years due to lost compound growth potential.
The panel's own research found that "the full costs borne by savers are simply not known" with the
main reasons "simply that many costs are not properly measured or declared".
It added "even fund managers frequently do not appear to know" – based on its research that found
around two-thirds of investment managers could not provide information on transaction costs.
The FSCP is calling for investment managers to be required to quote a single and comprehensive annual
charge, including estimates of forward costs such as transaction charges.

56. "All other costs, currently deducted by the investment manager directly from the fund, would be borne
by the investment management firm. This would enable consumers to compare different firms' charges,
and also act as a powerful incentive on firms to improve efficiency," it added.
It also suggested investment managers could have a strengthened legal obligation to put the interests of
their customers first, known as 'the fiduciary duty'.
56
Damning conclusion
Gina Miller, founder of SCM Direct and the True and Fair Campaign – which is calling for simpler cost
disclosure - said: "Exploitation of pension savers and investors is a national scandal and this report
exposes the depths of the scandal.
"The damning conclusion of this report that 'the evidence reveals a market characterised by a weak
demand side that is rapidly growing numerically, and a powerful industry in which misal igned incentives
are systemic and which enjoys, largely unchallenged, the potential to exploit consumer behaviour,
product structure complexity and the lack of cost transparency' should act as a wake-up shout, not call,
for all political parties, government, regulators and the industry."
Sue Lewis, chair of the panel, added: "People are depending more and more on investment to deliver
their long-term financial wellbeing, especially in the light of the recent pension reforms. It is completely
unacceptable that consumers do not know what firms are charging them to manage money on their
behalf, and cannot compare different offers. While we recognise that the industry is working to improve
disclosure, this does not go far enough."
Summary: News
The following report is aim to provide information to investors and pensioners regarding true costs of
investments in industry (Financial Services Consumer Panel (FSCP).
Most often the new investors are unaware about the true costs they might face on their investments.
The hidden costs dilemma has been explain by this report and called it as “national scandal”. This report
mentioned that annual management charge (AMC) levy is just 1.5% along with initial fees on the
investment; but there is also other charges cut-offs from the investments. These hidden costs (cut-offs)
are either implicit or not properly measured by the investment managers as most of them never provide
exact statistics for the transaction costs.
FSCP further mentioned that if hidden charges cut-off happens in future then the consequences would
be borne by the investment firms. It is also added that due to the high demand in the investment
market, its operations should be made more transparent, acceptable and reliable. Thus investors and
pensioners would not be exploited due to the malpractices of the investment market.

57. 57
Bibliography
Moneywise.co.uk. 2014. A beginner's guide to investing in the stockmarket. [online] Available at:
http://www.moneywise.co.uk/investing/first-time-investor/beginners-guide-to-investing-the-stockmarket
[Accessed: 3 Dec 2014].
Moneywise.co.uk. 2014. Hidden investment costs are "a national scandal". [online] Available at:
http://www.moneywise.co.uk/news/2014-11-17/hidden-investment-costs-are-national-scandal
[Accessed: 3 Dec 2014]
Reuters.com. 2014. Advanced Computer Software Group PLC (ASWA.L) Financials |
Reuters.com. [online] Available at:
http://www.reuters.com/finance/stocks/financialHighlights?symbol=ASWA.L [Accessed: 3 Dec
2014].
Advancedcomputersoftware.com. 2014. Advanced Computer Software Group Documents &
Reports. [online] Available at: http://www.advancedcomputersoftware.com/investors/finance-reports.
php [Accessed: 3 Dec 2014].
Digitallook.com. 2014. Advanced Computer Software Group Share Prices - Stock Quote (ASW)
Share Prices, Stock Quotes, Charts, News, Financials. [online] Available at:
http://www.digitallook.com/companyresearch/199769/Advanced_Computer_Software_Group/sh
are_prices.html [Accessed: 3 Dec 2014].

58. 58
Self Reflection
In this week I learned about the Insurance companies, liquid and illiquid assets and types of financial
instruments e.g. bonds. I also learned that what is FTSE 100 FTSE 1000 and what is FTSE 100 index and
charts and also that what is stock exchange and how it works and earns profit and who are involved in
the thing I learned is that stock exchange plays a key role in the country’s economy