Financial Markets

Understanding The Foreign Exchange Market
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With the world increasingly becoming a global village, more and more people are travelling and doing business in different parts of the world. Under such circumstances, it is crucial that you have a local currency of the country you are visiting to aid in your travel. Traditionally, travelers have been buying and selling currencies to aid in their travel and business through banks. These banks set particular rates and sell currencies to those in need. However, during the late 1970s,…...
The participants in the UK financial system
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Introduction The financial system is the main factor of the economy of a country. It is responsible for the day-to-day transactions like wages, paying bills, shopping. They are aided by financial institutions responsible for the monetary transactions and the financial markets which facilitate trade in cash and cash equivalents. Large Information technology (IT) systems facilitate communications and transactions among the individuals, organizations and the financial situations. The fundamental purposes of the system are to maintain financial stability and therefore a…...
Characteristics of Financial Instruments
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Financial instruments are capital arrangements that have been classified into various types depending on their attributed characteristics and structure and are easily tradable in financial markets. They are advantageous in that they allow efficient flow of capital without carrying along the actual amount of cash in the financial markets. These financial instruments will include the Demand Deposits which are amounts deposited by a person in a bank on legal agreement to withdraw upon demand without requiring any notice to be…...
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Financial Market and Institution
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A credit card is the new era money which is also called as plastic money. The credit card can be used to obtain instant cash like a debit card but in case of credit card banks lend money to the customer and change high rate of interest when the amount is not paid fully to the banks. The banks approve a certain cash limit which can be withdrawn from the credit card and also give a spending limit. This limit…...
Financial Markets Assignment
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Explain how interest rates decline following major Fed purchases of mortgage-backed securities. The FED implements quantitative easing by buying financial assets of longer maturity, e. g. , mortgage-backed securities, from commercial banks and other private institutions in order to inject a pre-determined quantity of money into the economy. This is a means of stimulating the economy and lowering longer-term interest rates further out on the yield curve; quantitative easing increases the excess reserves of the banks, and raises the prices…...
Financial Markets and Return
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Problem 1 (BKM, Q3 of Chapter 7) (10 points1) What must be the beta of a portfolio with E( rP ) = 20.0%, if the risk free rate is 5.0% and the expected return of the market is E( rM ) = 15.0%? Answer: We use E( rP ) = β P *(E( rM ) – r f ) + r f . We then have: 0.20 = β P *(0.15-0.05) + 0.05. Solving for the beta we get: β…...
Roles of Financial Markets and Institutions
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This continuing exercise focuses on the interactions of a single manufacturing firm (Carson Company) in the financial markets. It illustrates how financial markets and institutions are integrated and facilitate the flow of funds in the business and financial environment. At the end of every chapter, this exercise provides a list of questions about Carson Company that require the application of concepts learned within the chapter, as related to the flow of funds. Carson Company is a large manufacturing firm in…...
Financial Markets and Economy
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What are financial markets? What function do they perform? How would an economy be worse off without them Financial markets are institutions and procedures that facilitate transactions in all types of financial claims. Financial markets perform the function of allocating savings in the economy to the ultimate demander(s) of the savings. Without these financial markets, the total wealth of the economy would be lessened. Financial markets aid the rate of capital formation in the economy. The economy would be worse…...
Financial Literacy
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India is among the world’s most efficient financial markets in terms of technology, regulation and systems. It also has one of the highest savings rate in the world - our gross household savings rate, which averaged 19% of gross domestic product (GDP) between 1996-97 and 1999-2000, increased to about 23% in 2003-04 and has been growing ever since. While savings are more in India, where the savings are invested is a cause for concern. Investments by households have been more…...
Ball and Brown
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In 1968 Raymond Ball and Phillip Brown published ‘An empirical evaluation of accounting income numbers’ in the Journal of Accounting research. After an initial lukewarm response from the academic community it rapidly became what the American Accounting Association now calls ‘the seed that made a difference’. The purpose of this essay is to introduce the study of Ball and Brown(motivations, research questions and findings) and identify its significant contributions in capital markets research. Introduction According to the resources provided, Ball…...
Chapter 10 Banking and the Management of Financial Institutions
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Factors Causing Financial Crises 1) A major disruption in financial markets characterized by sharp declines in asset prices and firm failures is called a A) financial crisis. 2) A financial crisis occurs when an increase in asymmetric information from a disruption in the financial system A) causes severe adverse selection and moral hazard problems that make financial markets incapable of channeling funds efficiently. 3) A serious consequence of a financial crisis is A) a contraction in economic activity. 4) A…...
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