Financial Economics

Financial economics is the branch of economics studying the interrelation of financial variables, such as prices, interest rates and shares, as opposed to those concerning the real economy. Financial economics concentrates on influences of real economic variables on financial ones, in contrast to pure finance.

It studies:

  • Valuation - Determination of the fair value of an asset
    • How risky is the asset? (identification of the asset appropriate discount rate)
    • What cash flows will it produce? (discounting of relevant cash flows)
    • How does the market price compare to similar assets? (relative valuation)
    • Are the cash flows dependent on some other asset or event? (derivatives, contingent claim valuation)
  • Financial markets and instruments
    • Commodities - topics
    • Stocks - topics
    • Bonds - topics
    • Money market instruments- topics
    • Derivatives - topics
  • Financial institutions and regulation

Financial Econometrics is the branch of Financial Economics that uses econometric techniques to parameterise the relationships.

Payment System

Online shoppers commonly use credit card to make payments, however some systems enable users to create accounts and pay by alternative means, such as:

  • Debit card
  • Various types of electronic money
  • Cash on delivery (C.O.D., offered by very few online stores)
  • Cheque
  • Wire transfer/delivery on payment
  • Postal money order
  • Reverse SMS billing to mobile phones
  • Gift cards
  • Direct debit in some countries

Some sites will not allow international credit cards and billing address and shipping address have to be in the same country in which site does its business. Other sites allow customers from anywhere to send gifts anywhere. The financial part of a transaction might be processed in real time (for example, letting the consumer know their credit card was declined before they log off), or might be done later as part of the fulfillment process.

While credit cards are currently the most popular means of paying for online goods and services, alternative online payments will account for 26% of e-commerce volume by 2009 according to Celent.

Online Shopping

Online shopping pre-dates the internet/www, the IBM PC and Microsoft. It was invented in the UK in 1979 by Michael Aldrich of Redifon Computers. Aldrich connected a modified 26" colour television to a real-time transaction processing computer via a domestic telephone line and demonstrated online shopping. From 1980 onwards he sold his systems in the UK with considerable success.

The world's first recorded B2B online shopping system was Thomson Holidays in March 1981. The world's first recorded B2C was Gateshead SIS/Tesco in May 1984. The world's first recorded online home shopper was Mrs Jane Snowball of Gateshead, England in May 1984.During the 1980s online shopping was also used extensively in the UK and some parts of continental Europe by auto makers Peugeot-Talbot, Ford, Nissan and General Motors. All these organizations and others, particularly in Financial Services and manufacturing industry, used the Aldrich systems. These systems operated over the switched public network in dial-up and leased line modes. There was no broadband capability.

In 1990 Tim Berners-Lee created the first World Wide Web server and browser. In 1992 Charles Stack created the first online book store, Book Stacks Unlimited (aka, two years before Jeff Bezos started Amazon. In 1994 other advances took place, such as online banking and the opening of an online pizza shop by Pizza Hut. During that same year, Netscape introduced SSL encryption of data transferred online, which has become essential for secure online shopping. In 1995 Amazon expanded its online shopping, and in 1996 eBay appeared.[


Trade is the voluntary exchange of goods, services, or both. Trade is also called commerce or transaction. A mechanism that allows trade is called a market. The original form of trade was barter, the direct exchange of goods and services. Later one side of the barter were the metals, precious metals (poles, coins), bill, paper money. Modern traders instead generally negotiate through a medium of exchange, such as money. As a result, buying can be separated from selling, or earning. The invention of money (and later credit, paper money and non-physical money) greatly simplified and promoted trade. Trade between two traders is called bilateral trade, while trade between more than two traders is called multilateral trade.

Trade exists for man due to specialization and division of labor, most people concentrate on a small aspect of production, trading for other products. Trade exists between regions because different regions have a comparative advantage in the production of some tradable commodity, or because different regions' size allows for the benefits of mass production. As such, trade at market prices between locations benefits both locations.

Trading can also refer to the action performed by traders and other market agents in the financial markets.

Online Trade and auction site

Trade Secret:Trade Me founder Sam Morgan, already one of the richest men in New Zealand, is getting another $14 million or so bonus from the success of his online auction site.
Fairfax Media said yesterday it paid an extra $45 million to the original Trade Me shareholders, after Trade Me made operating profits of $70 million this year, up 39 per cent.
Online Trade and auction site:The partners got another $4.8 million last year, after hitting profit targets set when the firm was sold in 2006, taking the total sale price to $750 million.
Mr Morgan was worth an estimated $260 million earlier this year. He is on a "no phone calls" holiday with his family in Germany and France for a couple of months after stepping down as chief executive of Trade Me this year.
Online Trade and auction site:When in Wellington, Mr Morgan spends about a day a week at Trade Me's offices, and he remains chairman of the Fairfax offshoot.
"Sam is in Europe visiting various places he hung out at as a teenage exchange student," Trade Me business manager Mike O'Donnell said.
Online Trade and auction site:Mr Morgan spends more time these days as an investor in early stage businesses through his company Jasmine and as a "social investor and philanthropist".
Online Trade and auction site:Some recent investments included business intelligence software company iVistra Technologies and a Wellington human resources software maker Sonar6. Mr Morgan is also a director and investor in Xero, an online accounting software firm, and is investing in a firm that makes low cost intravenous drips.
Online Trade and auction site:His father, investment adviser, travel writer and philanthropist Gareth Morgan, and his wife Joanne, will get just under 7 per cent of the bonus, and like the original payout, that will go into his charitable foundations.
Online Trade and auction site:Gareth Morgan said yesterday he was "travelling illegally in Transdneistr", a breakaway province of Moldova, after being told by police the border was closed.
Online Trade and auction site:"These cross-country [motor] bikes are great for those of you who like not doing what you're told," he said.
Online Trade and auction site:Mr Morgan has travelled widely by motorcycle around the world. His latest trip includes Iceland, the top of Norway and Russia.
As a UN Children's Fund ambassador, Mr Morgan will be in Romania today spending a day with Unicef on flood relief work.
Online Trade and auction site:Half a dozen directors of venture capital company Movac, which put in $75,000 to help get Trade Me going, became multimillionaires as a result of the sale to Fairfax and will share in the latest bonus, along with a group of other original investors.

Trade Secret Printing To Host Open House

Trade Secret:one of North Americas’s fastest growing Trade Printer's is pleased to announce they will be hosting an OPEN HOUSE on Thursday, August 21,2008 from 1 pm to 5 pm to celebrate the completion of their new manufacturing facility at 40 Horner Ave, in Etobicoke, Ontario. The 104,000 sq ft building was acquired to house the new Goss M2000 24 page Sunday Press, 2-6 colour Heidelberg ( Web Site Executives Related Articles Google) and a 10 Colour Heidelberg Sheetfed press with roll-to sheet as well as the Full bindery facilities.
The Print Community is invited to tour the building and observe the new press in operation, along with a new high speed stitcher with in-line variable inkjet printing capabilities.

Trade Secret:on Tuesday said it initiated a lawsuit against Apex Medical Technologies, Inc. and its president, Mark McGlothlin, for infringing I-Flow's Patent and misappropriating I-Flow's valuable trade secrets. Trade Secret:The legal action states the Solace Pump was developed using I-Flow's secret information and infringes I-Flow's patent. Recently, Judge Sabraw of the United States District Court for the Southern District of California interpreted the patent claims in a manner consistent with I-Flow's position in the case.In separate actions, I-Flow has sued two distributors of the Solace Pump and would continue to seek enforcement of its intellectual property rights against entities and individuals who make, use, sell, or offer to sell the Solace Pump. Trade Secret