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Monetary Policy and the Stock Market
Finance & Accounting
Pages 4 (1004 words)
Monetary Policy and the Stock Market Abstract Contents Abstract 2 Contents 3 Introduction 3 Literature Review 5 Empirical Framework 8 Data Description 16 China 16 United States 17 Empirical Results 17 Conclusion 17 References 18 Introduction Research on monetary policy and their effect on stock market are important as it will explain the purpose of monetary policy in promoting price stability and moderate interest rates.
And for bankers and financial managers who wants to exercise prudence and responsible banking it would be wise to work with monetary authorities to ensure that the monetary policy is supported unequivocally. Money or currency is the government of the country’s commitment to its holder that the money can be traded in exchange for goods in the country. Meanwhile the true value of money is dependent on several factors such as the actual value of the goods that can be bought by the money or its value as compared with other currencies. However, given that these factors are also dependent on other economic indicators such as inflation and the volume of foreign currency reserve a country has, the correlation of the monetary policy of a country with its interest rates, stock market performance, and inflation will be explored by this paper. Monetary policy is implemented by increasing or decreasing the interest rates that is in theory would be able to inversely increase or decrease the supply of currency in circulation. In fine the monetary policy of a country controls the amount or volume of currency in circulation to stimulate growth or maintain the stability of its economy. ...
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