Nobody downloaded yet

Financial Markets & institutions - Assignment Example

Comments (0) Cite this document
Summary
Interest is stated as a percentage of the total sum of money borrowed. The balance of demand and supply sets interest rate. (Lurʹe 12)Loanable fund is the amount of money available for borrowing. Interest rate at higher…
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.2% of users find it useful
Financial Markets & institutions
Read TextPreview

Extract of sample "Financial Markets & institutions"

Download file to see previous pages (Lurʹe 15)
Example; 100.00 Euros are provided by a company for a period of one year at rate of 3 per cent. At the end of the year it expects to receive 1030.00 Euros. However, the bank supposes 10 per cent rate inflation in the next year it will want 1133.00 Euros. The interest rate expected by the bank will sum up to 13.3 per cent.
Treasury Bill (T-Bill) are simple market securities issued by the government. T-Bills are short-term securities used by the government to collect money from the public. In purchasing of T-Bills, the holder will pay a price that is less than the face or par value of it. (Kawai 16) T-Bills mature after three months, half a year or after a year of issuance. The government will then pay the holder the full face value. T-Bill provides guarantee and safety returns because it has full back and faith of the government. Investors lending money to the government get their money back with interest. Limited access is one of the drawbacks of T-Bills. Investors who need to withdraw their money before the maturity dates are reached have to pay a penalty. T-Bills have little returns because of lees maturity period mostly not more than one-year thus low amount of interest. (Kawai 21)
The banks or credit unions issue certificates of deposit (CDs) to holders who have deposited funds to the bank. CDs limit the holders from withdrawing the funds when in need of cash until a set period of time elapses. When one has to withdraw fund from the bank a penalty is incurred. CDs are secured form of investments and they offer high amount of returns. CDs are not prone to risk, pensions and instability. Disadvantages of certificate of Deposits are that they require a high amount of initial capital than that for saving account. Investors obtain little returns from CDs thus a drawback.
Companies create corporate bonds by giving debts with the aim of raising capital. Bond provide fixed amount of income and ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Financial Markets & institutions Assignment Example | Topics and Well Written Essays - 1000 words”, n.d.)
Financial Markets & institutions Assignment Example | Topics and Well Written Essays - 1000 words. Retrieved from https://studentshare.org/finance-accounting/1682358-financial-markets-institutions
(Financial Markets & Institutions Assignment Example | Topics and Well Written Essays - 1000 Words)
Financial Markets & Institutions Assignment Example | Topics and Well Written Essays - 1000 Words. https://studentshare.org/finance-accounting/1682358-financial-markets-institutions.
“Financial Markets & Institutions Assignment Example | Topics and Well Written Essays - 1000 Words”, n.d. https://studentshare.org/finance-accounting/1682358-financial-markets-institutions.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Financial Markets & institutions

Financial Markets and institutions

...included Lehman Brothers, Merrill Lynch, Fannie Mae, Freddie Mac, Washington Mutual, Wachovia, and AIG. Market Dynamics Financial markets the world over are always interconnected. The most evident example of this fact was seen in the financial crisis, when a housing bubble bursting in the USA crippled the major economies of the world. Institutions opt to mitigate their portfolio risk by diversifying the investments in various asset pools the world over. Similarly, banks trade in currency markets and complex derivatives. The bond and capital market are also deployment tools to ease of excess liquidity concerns. In line...
8 Pages(2000 words)Assignment

Financial Institutions and Markets

...in creating economic growth for the economy. Expansionary monetary policy can be a problem in a few cases. They are: a. In spite of low interest rates, people may be reluctant to spend or invest if they find lack of confidence in doing so. b. Even if the central bank reduces interest rates, it may be difficult to get loans from banks if there is a crunch credit situation in financial institutions; where in there may be a shortfall of funds to lend in the financial institutions. c. It depends on aggregate demand situation in the market. In case of global recession, expansionary monetary policy may fail to increase consumer spending. d. Time lag can be an...
8 Pages(2000 words)Coursework

Financial Institutions & Markets - Financial Innovation

...(GFC) is argued to be the result of this financial innovation. As a result of that most of the monetary policy makers have tightened their regulatory policies and have imposed several restrictions on the financial institutions worldwide. Borrowers have become more sensitive towards interest rates fluctuations in the financial market and the world is experiencing a situation of credit crunch now. Hence it is required to have a reassessment of the monetary policies by different nations in the world with its primary task being financial stabilization. It should also ensure development of financial innovations with more...
6 Pages(1500 words)Essay

Financial Markets and Institutions

...the former is more customized and offers tailor made innovative instruments in the later all transactions take place via exchange. The OTC market transactions are done mainly by the investment banks that heir traders or agents to market derivative instruments to clients. Some instruments of OTC market include forward contract, swaps (interest rates and currency), credit derivatives, and hedge funds. The derivative market transactions in US are mostly dominated by large multinational financial institutions. The global economic importance of derivatives market is that they are important instrument for determining current...
5 Pages(1250 words)Essay

Financial Markets and Institutions

...? Financial Markets and s Table of Contents Introduction 3 Foreign Exchange Market 3 Types of Transaction and their benefits 3 Factors Affecting Interest Rates 4 Forecasting Interest Rate Changes 5 Role of Federal Reserve 6 Recent Monetary Policy 6 Bond Markets Strategy 7 Conclusion 7 Reference 8 8 Introduction The financial markets of United States (U.S.) consist of different markets for diverse products which are offered on a range of trading platforms and exchanges. Among the different product traded are equities, fixed income securities, derivatives and foreign exchange. This paper will focus on the foreign exchange market in the U.S. and the types of foreign exchange transactions. It will also focus on the factors affecting... up. Sixth...
5 Pages(1250 words)Essay

Financial Markets and Institutions

...FINANCIAL MARKETS AND S An economic system is heavily dependent on financial resources and transactions provided by financial markets and institutions. Nations are evaluated based on their economic efficiency and sustainability, which rests in part on efficient financial markets. This paper will define what financial markets and institutions are and their implication in an economy particularly in a largely consolidating world market. What are Financial Markets and InstitutionsFinancial markets "consist of agents, brokers, institutions, and intermediaries transacting purchases and sales of securities." The individuals and institutions operating in the financial markets are linked by contracts and communications networks that form... an...
10 Pages(2500 words)Essay

Financial Markets and Institutions,

..., and permanent financial system in the United States (“What is the Purpose,” 2012). Presently, the Federal Reserve has four key roles, and these are the following: Administration of the US monetary policy through the regulation of money and credit conditions thereby leading to the stability of prices and full employment. Management of banks and financial institutions by safeguarding the security of the national banking and financial system while taking care of consumer rights. Sustenance of the financial system’s equilibrium and preparation for the possible emergence of systemic risks in financial markets. Lending of...
5 Pages(1250 words)Essay

Financial Markets and Institutions,

...Financial Markets and s Role of Financial Market in Creating Economic Wealth in the United s Akin to any other country, the financialmarket in the United States performs the core functions of facilitating fund transfer in the form of borrowing and lending, determination of price, information aggregation, risk sharing, liquidity and efficiency (Mishkin, 2003). The intermediaries and institutions operating the US financial market receive savings from domestic households, business houses as well as the Federal Government and invest those savings. The role of the financial market is to invest...
5 Pages(1250 words)Essay

Financial institutions and markets

...the financial assets, it is always considered more beneficial for the institution to enter into a repurchase agreement with the asset’s buyer to permit future repurchase of that specific asset. In this particular case, the repurchase price which is agreed upon, determines the rate at which the rate of interest builds up in the current money market. In additional, the asset virtually and literally remains in the borrowing institution’s balance sheet. A liability that represents the agreement to repurchase as well as cash is received by the borrowing institution from the lending institution. The latter has funds in excess and thus...
3 Pages(750 words)Essay

Financial Markets & institutions

...Financial Markets and s affiliation Due Role and function of financial markets and s in a modern economy The role of financial markets and institutions like capital markets and depository institutions is to offer an ideal avenues for the exchange and trade of securities and mediate between institutions or people to enhance a transaction between them (Howells and Bain, 2007). The properties or features of commercial papers Commercial papers are used to finance short-term financial requirements of the company as and when they fall due. They are flexible...
2 Pages(500 words)Assignment
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Assignment on topic Financial Markets & institutions for FREE!

Contact Us