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Ethics in Financial Markets - Essay Example
Financial markets involve financial transactions that an investor engages in, in order to make money, resulting in the growth/ expansion of the business. It encompasses: the stock market -these are ownership shares of a public listed company that are sold to investors in order for them to raise capital…
They are known to reduce the stock market volatility and offering a cooling effect on the US economy. The bond market is also part of the financial market that is traded at the stock exchange. Bonds can simply be termed as loans. When the prices of the stock go up, those of the bonds go down and vice versa.
Most governments and other corporate entities usually borrow from the market in form of bonds listed on the capital markets and they have a big effect on the mortgage interest rates. Commodities are also traded in the commodities future markets e.g. Crude oil, copper and other minerals. Futures involve a mechanism where a commodity is paid today for its delivery in future. Futures have a tendency to goad traders to borrow money so as to purchase the commodity making the deal to go sour should the price of the commodity dip, hence has a major impact on the stocks and the overall economy as a whole. Another form of the financial market is the Hedge fund. Hedge funds have over the years become popular due to the high returns it offers to the high end investor. Hedge funds do invest heavily in the futures and some analysts have argued that they help check the volatility of the stock market and in extension the US economy. Hedge funds though are being blamed for the 2009 recession. ...