Financial markets

risk can be classified into two types which are systematic (uncontrollable) risk and unsystematic (controllable) risk. The examples of systematic risk are the interest rate risk, inflation risk, foreign exchange risk, country risk, political risk and market risk. Meanwhile, the example of unsystematic risk is business risk, liquidity risk and credit risk. However, all this risk can be diversified which by creating a well-diversified portfolio. This diversified portfolio and mostly aimed by…

Financial Markets Rattle the Fed Historically, the semi-annual testimony to Congress on monetary policy by former Fed Chairmen has consisted of many platitudes. Consequently, there was usually very little guidance provided as to the future path of interest rates. Last week’s testimony by Fed Chair Yellen constituted, therefore, a departure from normal practice: she indicated a preference for higher interest rates sooner and more gradually vis-à-vis later and more rapidly. This signalled a…

An operating segment engages in business activities from which it can earn revenue and incur expenses. The financial information should be available and reviewed from time to time for an assessment of performance and resources. Starbucks does not evaluate the performances of its operating segments using asset measures. Identifiable assets by segment disclosed in Starbucks notes are assets specifically within each segment, including cash and cash equivalents, net property, plant and equipment,…

Measurements in UK Financial Markets Abstract Although many shortcomings of VaR model have been proposed and discussed, VaR is still a commonly used method to estimate potential risk within financial institutions. This paper will focus on the examination of time-aggregation assumption of VaR model in UK financial market. Also, it is necessary to test whether the currently proposed risk forecasting methods such as GARCH method and RiskMetrics approach are realistic in UK market. The results of…

A) positive; demand B) positive; supply C) negative; demand D) negative; supply Answer: B Ques Status: New Chapter 1 Why Study Money, Banking, and Financial Markets? 11 15) Evidence from the United States and other foreign countries indicates that A) there is a strong positive association between inflation and growth rate of money over long periods of time. B) there is little support for the assertion that ʺinflation is always and everywhere a monetary phenomenon.ʺ C) countries with…

bank plays an important role in the growth of the economy of a nation. Bank is a financial institution, which offers the service of deposit and lending of funds. In other words, a bank is an institution that accepts idle resources from the person who has a surplus of funds and makes those funds available to borrowers who have deficits. It looks after the financial troubles of its consumer, so banks act as financial intermediaries between depositors who supply the capital and the borrowers who…

Option b d b b c d d d c c a b spot market derivative market no arbitrage Question 2 Fundamental concepts of derivative markets: What are derivatives? Derivatives can be defined as the instruments whose value depends on the value of underlying assets which may be a commodity, metal, money currency, any stock or indices. The main purpose of derivatives is to avoid risk. Major uses of derivatives Following are the major uses of derivatives Risk management and Financial engineering Derivatives are…

techniques and tools of assets allocation and portfolio management of different types of securities. The essay also discuss about the risk attached to foreign issued money market and other relevant consideration to be taken wherever needed. Introduction: Investing in different assets is a risky and challenging task of finance market. It is generally practiced with the concept of how much risk an investor is willing to take. For example, is an investor a high risk averter or low risk…

Capital market theory is a description and the prediction of the progression of the capital. Capital market theory is used to measure the returns wanted by investors and the intrinsic risks involved; it is model that is used to price assets and most commonly used is to price shares. It is most definitely important response to financial judgment making. Besides that, Capital market theory develops a model for all unsafe assets and ads on the portfolio theory. For the development of capital market…

A stock exchange may be defined as a market where stock buyers connect with stock sellers. Therefore, a stock exchange does not own shares. Stocks may be traded one or several possible exchanges such as the New York Exchange (NYSE). It is important for one to understand that the relationship…