Tuesday, April 23, 2013

Microeconomics (2068Q4): What are the push and pull factors behind individual decision of poor Nepali worker's to go to foreign countries for employment?

Nepali workers go to foreign countries for employment

Pushing Factors

There are a lot of factors that compel the Nepalese workers to go foreign countries for employment. Some major pushing factors are as follows:-

1. Insecurity

People who wants to work in home land they are suffering from insecurity of business and themselves too. Fearfulness of  demand of donation by political parties, unions and other groups has made difficult to work. The basic needs for work environment hasn't prepared by the government. So its insecure to work in homeland.

2. Unstable political situation

The unstable political situation has made critical situation for work environment. Nepal Bandas, strikes by different parties, unions, groups has inversely effect the chances of employment in home country.

3. Unstable government
4. Lack of basic foundations for working environment
5. Poor law and order

Pulling Factors

  1. Better employment opportunities
  2. Attractive salary
  3. Earning money
  4. Job guarantee
  5. Information from partners working abroad

Monday, April 22, 2013

Finance: Bond and Valuation


Bond is a long term debt contract in which the issuer promises to pay a fixed rate of coupon or interest for principal upon maturity.

Bond Indenture

It is a paper where everything is mentioned about bond. Here bond's characteristics are written.

Types of bond

A. On the basis of issuer
  1. Corporate bond
  2. Treasury bond
  3. Municipal bond
B. On the basis of cash flow
  1. Redeemable bond with coupon
  2. Zero coupon bond (Pure discounted bond)
  3. Perpetual bond (Consol)

Other types of bonds available in market are:-

  1. Floating rate debt
  2. Income bond
  3. Sub-ordinate bond
  4. Convertible bond


The process of finding intrinsic value or formula value or theoretical value is called valuation. 

Microeconomics (2068Q1): Why long-run average cost curves are 'L' shaped instead of 'U' shaped?

Normally the long-run average cost curve (LAC) is U-shaped but the empirical study has found that LAC is L-shaped. Technological progress along with sustainable production practice enable the firm to maintain the cost of production at a minimum level in the long run. This makes the LAC curve first to fall and then remain flat which makes it L-shaped. When output increases, LAC first diminishes at a faster rate and become flat as the output reaches its optimum level.

Following are the reasons that justifies long-run average cost curves are L-shaped instead of U-shaped:-

1. Specialization:

Initially workers take comparatively longer time to perform a given task but their speed increases as they are involve in the same job again and again because of the specialization.

2. Learning by Doing:

With the continuous involvement of the producer of the entrepreneur in the production, his efficiency goes on increasing i.e. his bargaining capacity, coordination etc improve and hence cost of production goes on declining.

3. Improvement in Technology:

With the passage of time, technology goes on improving which helps to reduce the cost of production sharply in the beginning and after reaching certain level, the rate of decrease in cost is insignificant.

Sunday, April 21, 2013

Finance: Security Market

Security Market

A Security Market is a mechanism bringing together buyers and sellers of financial assets to facilitate trading. Nepal Stock Exchange (NEPSE), American Stock Exchange (AMEX), Over-the-counter (OTC) etc. are the examples of security markets.

Types of Security Market

A. On the basis of economic function

  1. Primary Market
    Market for issue of new or fresh security in order to raise capital by the issuer.
  2. Secondary Market
    It is the market for already issued or subscribed or listed security. Eg. Transfer the shares between an investor to another investor.

B. On the basis of maturity of security

  1. Money Market
    Securities having maturity period up to 1 year.
    Eg. Treasury bills
  2. Capital Market
    Securities having maturity more than 1 year.

OTC Market

A security which is not traded on an exchange, usually due to an inability to meet listing requirements.


Third Market

The third market refers to the trading of any securities that are listed on organized stock exchange in over the counter market.


Fourth Market

The fourth market refers to those institutional investors and wealthy investors who buy and sell securities directly from each other bypassing the normal dealer services. The fourth market organizer may collect a certain small amount of commission or a flat annual fee for helping to arrange these large transactions.


Methods of Market Index Computation

  1. Price weighted index
  2. Value weighted index
  3. Equally weighted index
  4. Geometric mean index

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