Got a tricky question? Receive an answer from students like you! Try us!

Introduction to Financial Markets - Forecasting interest rates - Essay Example

Only on StudentShare
Undergraduate
Author : dorianrosenbaum
Essay
Finance & Accounting
Pages 6 (1506 words)

Summary

Introduction to Financial Markets - Forecasting interest rates Name Institution Introduction to Financial Markets - Forecasting interest rates The "credit markets" section in a recent issue of The Financial Times Credit markets: Paper weight By Aline van Duyn, Michael Mackenzie and Richard Milne Topic: Some buyers fear a bond bubble may be building In this article, a Gary Lieb, a broker at Manhattan’s Apple Mortgage wonders why and how there are such cheap borrowing rates on mortgage loans…

Extract of sample
Introduction to Financial Markets - Forecasting interest rates

Interest rates, according to the Financial Times , have fallen back to the historic lows, permitting companies, individuals, and some countries to borrow loans at a price lower than before. Contrary to this, households and the extensive economy still fight back in the wake of credit stagnation. The relationship between these two forces, that is the stimulating impact on economic operations of low borrowing prices and the damping impact of a liability squeeze has adverse repercussions for investors globally, from those individuals who save on their own to the world’s largest insurance companies (Aline, Mackenzie, & Milne, 2010). For the past couple of years, following the 2008 collapse in equity markets as well as in a hysterical serach for “secure” investments, more cash has been poured into bonds as compared to earlier times. Bonds from the U.S Treasury debt to upcoming market corporate bonds have been performing amazingly well, being ranked among the possessions around the world that have generated the largest returns in 2009 and 2010. ...
Download paper
Not exactly what you need?

Related Essays

Interest Rates Swa[s Require Markets to be Inefficient
Currency exchange tailors international exchange transactions. Interest rates are characteristic of risks that result from the various key constituents of the foreign exchange market. One of these constituents is the interest rate swaps. Foreign exchange and interest rate operations provide opportunities for hedging in the foreign exchange market. Interest rate swaps in this context can be considered to be unique financing arrangements that allow corporations to significantly cut on their credit costs while improving their control on risks that accrue from interest rates and exposure to…
4 pages (1004 words)
International Financial Markets: Exchange Rates and Inflation
Thus, understanding of international financial markets is very crucial for any company wishing to invest in the global markets. A thorough research before investing in international markets is critically important for the success of the investment. Feng (2007, 35) points out that global markets around the world have suffered instability and stress due to weakening of the international economy. In essence when investing in an international market dominated by foreign currency investors, investors are subject to inflation that dominates foreign markets. Ryan (2007, 112-156) argues that stocks…
7 pages (1757 words)
Financial Forecasting
The report also explains further information that needs to be reviewed to make the findings more meaningful. This performance analysis can be used by the management, the shareholders or the potential investors to identify with the performance of the company and in particular assess its strengths and weaknesses. Assumptions The following information is available for preparation of the marginal costing cost statement ?/Unit Direct materials 0.04 Direct labour 0.15 0.19 Selling price 0.5 The fixed production overheads include depreciation amounts to ?3,000 per month. For the first month, the…
3 pages (753 words)
Financial Markets and Institutions
economy, impact of recent monetary policy on U.S. economy and the strategy for the use of bond markets. Foreign Exchange Market The foreign exchange market is an over-the-counter (OTC) market. The participants of foreign exchange markets are portfolio managers, importers and exporters, commercial banks, central banks, and foreign currency brokers. Types of Transaction and their benefits There are three types of foreign exchange transactions: spot transaction, forward transaction and swaps. A spot transaction includes deliver of the exchange by the seller of the foreign exchange to the buyer,…
5 pages (1255 words)
Introduction to financial Markets
The essay is developed from the Financial Markets Theory that avails classical asset pricing hypothesis, a hypothesis composed of objectives such as portfolio choices, basic asset pricing theorem, risk management, portfolio limit, information in financial markets and no risk neutral assessment. Financial Markets Functions The functions of the financial markets are geared towards fulfilling the theory statements and they include: Financial market price determination usually offers modes by which prices are determined both for freshly issued financial assets as well as the available stock of…
5 pages (1255 words)
International Bond and Currency Markets
In precise, it also helps in pre-determining the fluctuation of the currency appreciation or depreciation in respect to countries and influenced cross border trade prospects by a substantial extent. It is noteworthy that the volatility of exchange rate, in the short run and also in the long run depends on multiple factors such as the demand and supply prospects in the financial market. Arguably, forecasting in the long run and short run is considered as quite difficult, which can be explained with reference to the Theory of Speculation in the market and the collective belief of the investors…
8 pages (2008 words)
Banking - Interest rates
One of the effects of the low interest rate on the Japanese banking sector is reduced productivity. Banks have been forced to operate under low revenue level and net interest margins explain this. Interests that banks charge on their customers on loans forms a significant percentage of their income, while interest that banks pay on their customers’ deposits contribute to the banks’ expenditure. Maximizing revenues would therefore require optimizing the gap between interest charged on loans and interest paid on deposit. The country’s low interest rate however offers a restricted interest…
3 pages (753 words)