Tag Archives: Business

Why are lots of movies released on the same day?

The answer to this is pretty simple. Ticket sales on weekdays are second to none compared to anything from Friday to Sunday. It’s way more profitable to have a movie be released on Thursdays or Fridays so that they can make the most money with the initial hype. It’s just ideal, and opening weekends are the biggest way a movie’s success is gauged.

As for why there seems to be a lot on specific days and the releases aren’t more spread out, is because specific times of the year are big hotspots for ticket sales. For example, the movie IT was the highest selling movie in any September ever. This is majorly due to the fact that not many big producers would have their movie be released in September. The most popular times of the year are most of summer and anytime near Christmas.

It could also be that certain weekends are picked over others because companies have other movies coming out after that and don’t want to force movie goers to pick between their own movies. A staggered release date for one particular producer would alleviate movie cannibalism.

How do insurance companies not go bankrupt when a natural disaster happens?

Natural disasters are force majeure and usually not covered, and for those policies that do cover them, they have actuaries (data scientists) making sure that the loss of disaster is lower than the expected premium plus investment earnings earned.

Furthermore, your insurance company doesn’t always hold your policy any more than Walmart makes your Nintendo console.

Many consumer insurance companies simply resell the risk of the insurance to an even larger company.

The insurance industry has enough money to pay these sorts of things off because people pay a ton of money for insurance, and not just health insurance.

In the developed world on average 9% of all the income of every dollar spent in an entire year goes into insurance. In the US that’s almost 2 trillion dollars every year that goes straight to pay for these sorts of things and sits there until it’s needed.

Why do gift cards have an expiry date?

Gift cards are put on the balance sheet of the company as a liability. They have a debt in order to provide a product or service at a future date. Many gift cards are never redeemed but the company cannot know which cards are never going to be used. If they never expired then such debts would accrue over time into a large sum of debt which will never actually be called in.

Why is this a problem? Because the value of a company is determined in part by considering their assets compared to their debt. If you have $100 million in assets but owe $120 million in debt then your company isn’t really worth anything at all. So building up excess gift card debt which can never be paid off is something to be avoided.

Why doesn’t the government simply print more currency notes when a country is short of money?

No country would embank on currency printing frenzy unless it wants to bring on hyperinflation and ruin its economy as Germany did in the decade of 1920s.
 
The point is that if a government’s central bank prints more money and puts it into circulation, it effectively devalues that currency and reduces its buying power by the same amount. In other words, if a hundred dollar note is just another printed paper like a handbill or a leaflet then why should anyone see it as having any more value than just another piece of paper? People with fattened pockets will have to pay more for the same product because wages and raw material that went into manufacturing that product have been paid for with more currency notes.

In short, double the money supply and the buying power of that money goes down by half. People lose confidence in such currency. That is why years ago countries often used to tie-up how much money they had in circulation with how much gold the government had in their vaults. This meant that for every dollar in circulation in a country like the US, there was a dollar’s worth of gold reserve with the central bank. This tie-up of gold with currency was called the gold standard. It has how been abandoned because times have changed.

Today, with international trading of currency and stokes and shares, it’s the strength of a country’s economy and a government’s control over it that determines the strength or weakness of currency.

More reading:
Gold standard (Wikipedia)
Hyperinflation (Wikipedia)
Monetary system (Wikipedia)

Related post:

Which is the highest denominated US dollar note?

It is $ 100,000 currency note bearing President Woodrow Wilson’s portrait, but has never entered public circulation since very few people would take the risk of keeping such valuable piece of paper in their custody and even fewer people would be inclined to accept it by way of payment. These notes are used only in the US government for internal transactions.

The highest value currency notes in circulation are those for $ 10,000 which were released by the US Federal Reserve between 1985 and 1945. These were gradually withdrawn after the World War II, but 200 such notes still remain in circulation as legal tender.

More reading:
United States dollar (Wikipedia)
Large denominations of United States currency (Wikipedia)

Related posts: