We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

The effect of liquidity risk on carry trade returns - Thesis Example

Comments (0) Cite this document
Summary
Using the Liquidity Spiral Theory proposed by Brunnermeier and Pedersen (2009), it is possible to discover that (i) liquidity risk can force speculators to suddenly…
Download paper
GRAB THE BEST PAPER
The effect of liquidity risk on carry trade returns
Read TextPreview

Extract of sample
The effect of liquidity risk on carry trade returns

isk caused by huge volatility in financial market can lead investors or speculators into operating with extremely high margins that could eventually compel traders to scale down or totally halt their positions to avoid currency crash; (iv) finally, liquidity risk can lead to a drastic reduction in investor’s expectation for gains, which invariably helps to correct the violation of Uncovered Interest Rate Parity (UIP) normally referred to as “forward premium puzzle” (Brunnermeier and Pedersen, 2009).
In this paper, qualitative research methodology is employed by scrutinizing related literature. Any observable limitations in this study stem from the body of literature consulted in the course of preparing this research, and attempts are made to restrict the subject-matter only to liquidity risk and its effects on carry trade returns.
The financial crisis that has recently hit the global economy has highlighted an important concept that has long been ignored by economists, policymakers and other stakeholders in the industry: the importance of liquidity in the health of financial systems. According to Ben Bernanke, chairman of the Federal Reserve System, the “weak liquidity risk controls were a common source of the problems many firms have faced" (Bernanke, 2008). But it was only after the financial meltdown in 2007-2008 that it was acknowledged and sufficiently recognized by the industry. The financial speculators have long operated with such greed that eventually resulted to the vulnerability of the financial and banking industry with the gigantic risks that have been accumulated, which is unprecedented in modern history (Froot, 2001). The practices of unwinding of investors’ positions, higher liquidity risk, higher margins and the consequent low returns have eventually created the volatility in the financial market.
An investigation on the liquidity issue and its effect on all financial markets are quite comprehensive and so, for this paper, I would be ... Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“The effect of liquidity risk on carry trade returns Thesis”, n.d.)
Retrieved from https://studentshare.net/miscellaneous/403402-the-effect-of-liquidity-risk-on-carry-trade-returns
(The Effect of Liquidity Risk on Carry Trade Returns Thesis)
https://studentshare.net/miscellaneous/403402-the-effect-of-liquidity-risk-on-carry-trade-returns.
“The Effect of Liquidity Risk on Carry Trade Returns Thesis”, n.d. https://studentshare.net/miscellaneous/403402-the-effect-of-liquidity-risk-on-carry-trade-returns.
  • Cited: 0 times
Comments (0)
Click to create a comment
CHECK THESE SAMPLES - THEY ALSO FIT YOUR TOPIC
Managing Financial Risks With Derivatives
This paper sought to have a clear knowledge on the financial risk faced by the firm; to study the effective application of derivative by various multi-national firms in risk management; to analyze in-depth of Currency risk, Exchange rate fluctuation, Interest rate fluctuation and to study the concept and use of derivative.
46 Pages(11500 words)Thesis
Brand value and its effect on public perception and to a business
4 21 4.1 Findings and Analysis 21 4.1.1 Performance of the Energy Sector of UAE 21 4.1.2 Public Perception regarding Oil and Gas Companies and Brand Value 22 4.1.3 Analysis of the Research Conducted 23 Chapter 5 24 5.1 Conclusion 24 5.2 Recommendation 25 5.3 Limitations and Scope of the Study 25 Works Cited 27 Bibliography 29 Chapter 1 1.1 Introduction The term Brand signifies a name, symbol, design or combination of all of this.
30 Pages(7500 words)Thesis
Funding Healthcare System, Sharing Risk and Portfolio Theory
Achieving these measures, require input from financial resources that would support purchase of equipment, building structures, compensating health service staffs, and paying for drugs among other consumables (Glied and Smith, 2011). Therefore, there is a need to understand how these finances are generated and managed that often involves revenue collection processes and pooling of funds (Grossman, 2011; pg.
15 Pages(3750 words)Thesis
The influence of risk attraction and risk aversion in the adoption and diffusion of the extreme sports
Of specific importance are studies on the emergence of extreme sports, routines and personality of athletes, and risk attitude towards sports (Moran, 2004). Risk is a socially and culturally created concept originating from the deeply rooted aversion of contemporary society for uncertainty.
10 Pages(2500 words)Thesis
Thesis on the Decline Effect- based on the article by Jonah Lehrer (2010)
This decline effect has shaken up the scientific community, causing many researchers to doubt the purpose of conducting research if the results are only going to drastically change in the future. However, regardless of the confusion and discouragement presented with the decline effect, scientists should not worry about the decline effect, but continue to conduct their research with the hopes of understanding the functioning of the decline effect.
2 Pages(500 words)Thesis
Trade Related Intellectual Property Rights: A Study on its Legal and Political Impact
Trade Related Intellectual Property Rights: A Study on its Legal and Political Impact Proprietary rights resulting from the innovative research and development of products which are original in nature are paramount and come within the protective mantle of intellectual property rights.
2 Pages(500 words)Thesis
Trade and labour standards
The member governments of Europe and North America believe that certain rights which could be considered as a part of the WTO agreement are “the freedom to bargain collectively, freedom of association, elimination of discrimination in the workplace and the elimination workplace abuse (including forced labour and certain types of child labour)”(WTO).
2 Pages(500 words)Thesis
Franchising
However the modern conceptualization of the business organization as a socially responsible outfit has gone so far as to create a different image. Fast food franchises operate in a highly competitive environment local fast food outlets claiming to sell identical products compete against them.
40 Pages(10000 words)Thesis
Insurance Risk Securilization
The function of insurance is to spread the loss over a large number of persons who are agreed to co-operate each other at the time of loss. Oxford Dictionary of Business define insurance as "A legal contract in which an insurer promises to pay a specified amount to another party, the insured, if a particular event (known as the peril), happens and the insured suffers a financial loss as a result.
10 Pages(2500 words)Thesis
The effect of reverberation and amplification on sound localisation
Hearing aid wearers often complain that the hearing aids don’t help them listening in noisy environments or under reverberation. Previous research revealed that the simple amplification gained from the hearing aid does not necessarily overcome
35 Pages(8750 words)Thesis
Let us find you another Thesis on topic The effect of liquidity risk on carry trade returns for FREE!
Contact us:
+16312120006
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us