Financial Markets and Risk Essay example
College
Essay
Finance & Accounting
Pages 4 (1004 words)
Download 0
Introduction “Monetary policy is a tool used by the central bank to manage money supply in the economy in order to achieve a desirable growth.” (The Economic Times, 2011) The major role of any monetary authority is to decide on a rate of interest from time to time depending on the economic conditions prevailing in the country in order to promote growth and maintain stability…

Introduction

The long term savings and investment products offered by banks and NBFI’s are mostly life assurance, pensions and other investment products such as fixed deposits with a long term maturity. Fixed deposits are time deposits which give a higher interest rate than the normal demand deposits. Pension products are aimed at meeting the retirement needs of investors wherein a lump sum amount is given to the investor which is accrued over the years. Investing in bonds (government and corporate) is another option where there is more safety even though the returns may be comparatively less. Some banks and many NBFI’s provide platform to invest in mutual funds also. II. Implications for individual savers and investors of a significant increase in the general interest rates. The most visible effect due to the increase in interest rates is on the loans borrowed and deposits made by individuals. An increase in interest rate means increase in the repo rates of banks. This will result in an increase in the mortgage loans’ interest as well as other loans and debts like credit card debt. ...
Download paper
Not exactly what you need?

Related papers

Finance Markets and Risk
The related pressure later extends to the liquidity of funding of financial institutions around the world that are assisting those independent markets. Illiquidity in markets sequentially can result in potentially momentous real economic impacts, thus warrant policy action, particularly by central banks. (Evanoff et al 2009: 7). As per IMF (International Monetary Fund), BIS (Bank for International…
Financial Markets and Risk
It will also mobilize and pool savings. Financial market also helps in diversification of trade and reduction of risk. (Campion 2010, pp.67-209) It is vivid to note that this market facilitates development of financial institutions and instruments that can manage risks. (Baumol 2011, pp.122-130) The system also provides financial regulation to ensure stability of financial institution in any given…
Financial Markets and Risk
For investors who are moderate on their risk taking mentality have hybrid products to choose from. This report will deal with various investment products that are provided by financial institutions and the implications of market interest rates on investors and banks. Long term savings and investment products provided by Retail banks and Non Banking Financial Intermediaries or NBFC’s Some of the…
Financial Markets and Risk
These operate in a competitive financial market where the objectives of firms are met. The objectives of the firm include: profit maximization, wealth maximization, employee welfare, customer interest, society welfare, and duty to the government. The current rate of economic development, characterized by fluctuations in price, increased poverty levels. Increase in population growth rate, among…
Financial Markets
Therefore, it is considerably important that shareholders and financial directors have an excellent understanding of the financial setting in which they conduct their activities. It is important to note that a strong financial environment plays a significant role in economic expansion and prosperity. The many corporations increasing funds to finance investment expenses as well as shareholders…
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…
Financial markets
An asset manager while creating a portfolio diversifies the total investment into an optimal mix of asset class with an aim of either to increase return or reduce risk, so as to create a balanced portfolio. Traditionally asset managers allocated a structure of 45% of assets were invested in equities, 25% in bonds, 15% in property and 15% in cash, based on the client’s need of asset classes which…