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 Post subject: Buying and selling bonds
PostPosted: Fri Jul 17, 2009 9:37 am 

Joined: Jun 16, 2009
Posts: 1900
Location: Canjara
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User avatarWinners
Simunomics Board Room
INTRODUCTION
The simunomic bond system plays a crucial role in the development of businesses. Borrowing(buying) bonds can help a company with much needed cash to expand your businesses, or to pay off loans. Lending(selling/investing) bonds are a good way for companies to put their extra cash to use.

OBJECTIVE
This guide is meant to interpret the simunomics bond system into a more common form of money handling. The goal is to explain the bonds in such a way that most new players can understand the basics, and not become overwhelmed with the hidden simplicity of the bonds. This guide is not a replacement for the official Simunomics help files, it is a supplemental to help simplify. The original guide can be found at http://simunomics.com/HelpIndex.php?Page=Bonds

BASICS
1. The first thing to look at before buying bonds, is the SIR, or Simunomics Interbank Rate, easier remembered as the Interest Rate. The SIR is the most important part of loans, as it determines how how much money you recieve(borrowing), or pay(selling/investing). The more money people borrow, the more the bank charges the next person to borrow, the opposite when lending;The more money people invest, the lower the SIR for the next investor. Now that you know what the SIR is, you want to time your actions right(if it is not urgent).

2. Timing is very important when deciding to use bonds. If you want to borrow money, it is normally wise to do so a few days before the monthly tax sets in, as most companies will have to borrow money to pay the debt off. If you want to invest however, you might want to wait until the monthly tax is about to become overdue. A surge of borrowing normally takes place then, as alot of companies scramble to pay the debt off.

BORROWING
For both of these examples, assume we are going to the same bank, with exactly the same rates, fees, and interest charged.

1. Concept Differences
In Real Life
In Real Life, if you went in the bank and asked to borrow 1M dollars(Assume we skip all the legal mumbo jumbo, and small payments)for one(1) month, the bank would deposit the 1M dollars into your account, and you are free to leave the building. At the end of the month, when the 1 million dollar loan is due, you go in to see how much you have to pay them, for the interest and fee's and everything, you find out that they charged a 10 Thousand dollar fee for borrowing money, and 300 Thousand in interest.

So, when you payback the loan, you would pay them 1,310,000 dollars. [1,000,000(1M) + 10,000(Bank Fee) + 300,000(Interest Charge) = 1,310,000]

Simunomics
Using the exact same scenario, borrowing the 1 million(1M) with 300 Thousand in interest, and a 10 Thousand Bank Fee.
You walk into the bank and ask to borrow 1M dollars, the bank would set you down and say, we work things to where at the END of the loan, you owe us a million dollars. So, instead of borrowing the million, and paying interest ON TOP of it, they would work it backwards.
They would do this

1,000,000(Amount to payback at end of month) - 300,000(Interest Fee) - 10,000(Bank Fee) = 690,000. So you borrow 690,000 thousand dollars on day 1, and at the end of the month, you would owe exactly 1M.

2. Advantages and Disadvantages
In Real Life
The advantage of using this method is that you get the amount you need upfront, and pay the interest and everything later. The downside is that you have to come up with the extra money when the loan is due(assuming you dont make payments).

Simunomics
This method can be a hassle, especially because the interest rate changes from day-to-day. You can never borrow the exact amount you need, since the interest and fees are taken out Upfront. So if you need to borrow 1M dollars, you have to take out multiple bonds(loans) to get it. The real advantage, in my oppinion, is that when the loan is due, you owe 1 million dollars. It seems easier to keep track of what you owe this way.

SELLING/LENDING

1. Concept Differences
In Real Life

This time, instead of going to the bank to borrow money, you want to invest some extra money you have, so that it can gain interest.
You go to the bank with 1 million dollars in your hand, and say, I want to invest this for 1 month, and I see that you are giving 10% interest. The bank says yes, but we charge a 10,000 Bank Fee. So you hand the bank the 1M dollars and go about your business for a month, and then come back.

The bank would then hand you your original 1M dollars, plus the interest that the 1M gained while it was in the bank, but takes the bank fee out. You would walk out of the bank with 1,090,000. [1,000,000 + 100,000(Interest) - 10,000(Bank Fee) = 1,090,000]

Simunomics
***The formula for this will be after the Conclusion of this Guide(2 ways to do it?)***

Using the Simunomics Method, you would walk into the bank and ask, "How much money do I have to give you so that at the end of the month, you are going to give me 1M dollars even?". The bank does some figuring(10% Interest, 10,000 Fee) and comes up with the number 918,181.82. So the bank wants 918 Thousand up front, and at the end of the month, they will hand you the 1M you asked for.

2. Advantages and Disadvantages
In Real Life
Using this method, you have to invest more up front, BUT, you make more money off of interest. More money being invested, the more you make/lose.

Simunomics
In Simunomics, as you noticed with borrowing money, they want the bond to equal 1M dollars when it expires. In my oppinion, it makes things easier to manage, knowing exactly how much money is coming your way, or how how much owe.

CONCLUSION
I hope this guide will help ease your transition into using a different style of money handling. By using comparisons with numbers, I hope I have achieved the goal of helping you distinguish how simunomics bonds work. BE WARNED! This guide is STATIC, meaning a set interest rate, being calculated 1 time. If you do not end the bond early, the Face Value(Ending Value) will ALWAYS be 1 million dollars. If you end early, you must abide by the new interest rate, which could mean paying more OR a fast profit*Hint Hint*

*Equation 1*
X = investment
x + .1(X) - 10,000 = 1,000,000
1.1x -10,000 = 1,000,000
1.1x = 1,010,000
x = 918,181.82

*Equation 2*
X = investment(y) - 10,000
x + .1x = 1,000,000
1.1(y - 10,000) = 1,000,000
1.1y = 1,011,000
y = 919,090.91


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 Post subject:
PostPosted: Fri Jul 17, 2009 9:45 am 

Joined: Jun 16, 2009
Posts: 1900
Location: Canjara
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User avatarWinners
Simunomics Board Room
If I am missing something, or a step is incomplete/confusing, will you guys reply, and I'll try to fix.

I would greatly appreciate any and ALL input on my guide. I know I could still learn quite a few things ;)


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 Post subject:
PostPosted: Sat Dec 26, 2009 12:08 pm 

Joined: Apr 20, 2009
Posts: 302
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User avatarKrudd Kapitalism
 
Just say your score is 500,000. You invest in a bond, bringing your score to 500,165. Your asset tax has now risen from $152,944,684.45 to $153,018,964.59 or up $74,280.14 as a result. But at the current SIR of 0.471% your bond only gains you $35,427.67! So if your score is 500000 you actually lose around $40,000 by investing in a bond.

In fact, if your score is more than 100000, then at the current interest (at 0.471%) you are worse off by investing in a bond. Judging by the large drops in IR which can only be attributed to the larger companies, there are a few large companies which like to lose money (which is actually fine by the majority of us). My advice would be to sell off all those bonds you have invested in before month end so that your asset score doesn't get overinflated again next month.


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 Post subject:
PostPosted: Sun Dec 27, 2009 7:18 am 

Joined: Nov 6, 2009
Posts: 4948
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User avatarReal Value
 
Bond investments can have unexpected consequences, since your score goes up when you buy bonds. Increasing score may be nice to do if it unlocks something you want to have access to at a higher level (e.g., larger raw material sites), but it also increases your tax base for calculation of fixed taxes. This is a problem for larger players, and may make bonds unprofitable, as has already been pointed out in the prior post.

You also may level up faster than you expect with a bond investment, and might miss out on the opportunity to contribute to charities at a level if you buy bonds without thinking about how that purchase will affect your total score. Your rank won't go down again when the bonds are sold, so be careful with making investments which have long-term consequences that can not be undone.


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 Post subject:
PostPosted: Sun Dec 27, 2009 7:11 pm 

Joined: Sep 5, 2009
Posts: 158
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PiggyBank
 
The flaw in your logic is you assume those large companies are paying tax. If they only build every 6 months, then they dont have to pay tax 1, out of 6 months.


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 Post subject:
PostPosted: Sun Dec 27, 2009 11:34 pm 

Joined: Jun 16, 2009
Posts: 1900
Location: Canjara
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User avatarWinners
Simunomics Board Room
I'm hoping they change that policy. Change the entire tax concept, and make it mandatory.


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PostPosted: Mon Aug 20, 2012 1:06 am 

Joined: Aug 12, 2012
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User avatarThe Drakarian Hedgemony
 
Do I have to reinvest the bonds each month?


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PostPosted: Mon Aug 20, 2012 1:49 am 

Joined: Aug 6, 2011
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User avatarcontroling Inc.
 
Right now bonds are a bad investment, but if you want to continue using bonds and investing you will need to repurchase after 21 days


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PostPosted: Mon Aug 20, 2012 2:25 am 

Joined: Aug 12, 2012
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User avatarThe Drakarian Hedgemony
 
thanks. Just wanted to know since I'm not at that level yet.


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PostPosted: Mon Dec 03, 2012 8:28 am 

Joined: Dec 2, 2012
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User avatarGrim Enterprises
Drakar Chamber of Commerce
First, you didn't go into discounts and premiums against par on bonds. Is this an issue in the game version? Is there a real bond market, or just a simple interest calculator, more like a CD?

Second, it seems to me that the level restrictions on borrowing and investing are exactly backwards. Any idiot can invest in bond funds, or call a broker and have him buy 100 bonds issued by XYZ Corp. But they can't go into an investment banker's office and negotiate a bond issue. That takes a much more advanced set of circumstances to set into motion.

Just sayin... :cool:

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President, Grim Enterprises
Because Business is a Grim Thing


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PostPosted: Fri Feb 15, 2013 6:50 am 

Joined: Mar 3, 2012
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Boston
swimmer wrote:
Right now bonds are a bad investment, but if you want to continue using bonds and investing you will need to repurchase after 21 days


Right now, bonds are an amazingly good investment!


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PostPosted: Thu Mar 21, 2013 8:35 pm 

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User avatarThe Godfather
 
One of the best guides ever made. :thumbup:

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PostPosted: Sat Mar 23, 2013 11:10 am 

Joined: Apr 9, 2011
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User avatarMinMax
Bug Swatter
Just because you brought this old topic back again, I would like to add that the author was the largest raw material supplier in the game and his quality was unbeatable. But later he realized that his earning was very less compared to his size. The raw material system needed changes because your earnings were simply less than what they looked. Later the raw material system was improved by addition of extraction tools and a few changes were made. Later he left the game. Vanished just like that. Reset his company, leaving no traces. Sad when smart people leave the game, and other people like Na.wan enjoy destroying it.

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PostPosted: Sun Mar 24, 2013 6:26 pm 

Joined: Nov 6, 2009
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User avatarReal Value
 
Rahul A wrote:
Just because you brought this old topic back again, I would like to add that the author was the largest raw material supplier in the game and his quality was unbeatable. But later he realized that his earning was very less compared to his size. The raw material system needed changes because your earnings were simply less than what they looked. Later the raw material system was improved by addition of extraction tools and a few changes were made. Later he left the game. Vanished just like that. Reset his company, leaving no traces. Sad when smart people leave the game, and other people like Na.wan enjoy destroying it.


He left before extraction tools were introduced. Part of the reason he left was due to some personal issues that made it difficult for him to find time to play the game. He experienced some very serious problems and challenges in real life that were fairly sudden and unexpected, and as a result, the game had to be set aside to deal with personal challenges that were more important at that time.

Something similar has happened more recently to APCE and BK, which has resulted in extended inactivity due to greatly increased personal demands on his time due to changes in his personal life situation.


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