Sign Up Now
Get instant access to over 1 million+ study documents
OR
Already registered? click here to login
By creating your account, you agree to our terms of service, privacy policy and student honor code.
Financial System
financial markets are the places where capital exchanges hands. Those with capital to invest are able to invest in businesses that are seeking capital. The same occurs with financial institutions as intermediaries. The result is that the economy benefits significantly from this arrangement. People with good ideas are able to raise capital in order to bring those ideas to market. For businesses, the U.S. financial markets are a source of investment capital that helps them to grow. With a wealth of financial options at their disposal, businesses are able to thrive. U.S. financial markets also benefit individuals. As consumers, they benefit from having the choice that results from a strong business community. As investors, the U.S. financial markets give them places to earn a return.
The U.S. Federal Reserve plays the role of the central bank of the country, the regulator of the financial system and seeks to manage economic outcomes like GDP, inflation...
The Federal Reserve Board implements monetary policy, and the Chairman is the head of the Board. The board sets the discount rate, which is the basis for interest rates. It also conducts open market transactions and sets reserve requirements, which affect the supply of money in the economy. Through these means, the Fed seeks to stabilize the economy and create the conditions for stable growth (Federal Reserve.gov, 2013). The Chairman runs the Board, and is therefore the one who spearheads the decisions about monetary policy.
The effectiveness of the Fed in today's economy is subject to debate. Normally, the Fed has a strong impact, but that is because the fluctuations in the economy are not significant. Today, the Fed is trying any number of tactics to stimulate the economy, but has not been particularly successful. Keeping interest rates low for years usually results in an overheated economy and inflation but neither is happening right now. This…
Works Cited:
FederalReserve.gov. (2013). Purposes and functions. Federal Reserve Board. Retrieved May 7, 2013 from http://www.federalreserve.gov/pf/pf.htm
Moffat, M. (2013). Expansionary monetary policy vs. contractionary monetary policy. About.com. Retrieved May 7, 2013 from http://economics.about.com/cs/money/a/policy.htm
The decision of investing or not here then depends on the personal adversity to risk of each individual investor. The general theory states that each investor should construct a diversified portfolio, which adequately balances high risk-high gain shares with medium or even low rates of risk and gains (Hagin, 2004). New Zealand could then be assimilated with a medium risk-medium gain share, and as such would be perceived as
Interest rates are very low in the U.S. right now, and this should mean economic expansion. The U.S. is the largest single national economy is the world, so how the U.S. performs in terms of its economics is an important thing for the world. Growth in the U.S., spurred by low interest rates, should mean growth elsewhere as well, since the U.S. can buy more products from those countries and
The cost of these funds and funds availability continue to go down due to the competition taking place between these savings and earnings channels. The joining of two distinct parties in investing and growth through financial intermediaries is mostly completed via a financial institution supported by Federal Deposit Insurance Corporation (FDIC). In the financial intermediation process, financial institutions play a key role by channeling monies from loans and savings to
He said that the application for Hong Kong Airlines was to list as a so-called "red chip" (overseas registered Chinese company) that had been approved by the State Council. They way, Grand China, which just two years ago called off a share sale plan due to the global economic crisis, is also the parent company of China Xinhua Airlines, Changan Airlines, and Shanxi Airlines ("Two airlines target," 2010).. Hong Kong
Financial Markets and Institutions Role of Financial Markets Financial markets play a significant role in creating wealth in the United States. At the heart of this role is that financial markets facilitate the economically efficient allocation of capital. The holders of capital need places to invest that capital in a way that earns them a return, but they do not always have the best ideas with respect to how to use that
functions of financial markets and discusses why a dollar tomorrow cannot be worth less than a dollar the day after tomorrow. Furthermore, the paper explains the cash flows associated with a bond to the investor. And discusses the term "price-earnings (P/E) ratio." In addition, the paper discusses the certainty equivalent approach to estimating the NPA of A project and discusses the problems associated with capital investment process. Lastly, the