The other element that makes stock markets more attractive than different sorts of investment is its liquidity. Many people invest in stocks because they need to be the proprietors of the firm, from which they advantage when the organization pays dividends or when stock costs increases. Be that as it may, numerous investors purchase stocks with the end goal of control over the organizations. (Luu, T B., 2014) 2.1 Attitudes, perception, and behavior of Investors toward stock
Quantitative easing is one of unconventional monetary policy tools. This paper will elucidate what is involved in a policy of quantitative easing and deliberate reasons why such a policy might damage a policymaker's credibility. The definition of quantitative easing has been stated in many economic documents. According to Sloman and Wride (2009), “quantitative easing is a deliberate attempt by the central bank to increase the money supply by buying large quantities of securities through open-market operations. These securities could be securitized mortgage and other private sector debt or government bonds”.
It sharpens the knowhow of household regarding implementation of farm activities and family healthy as well as other activities. It also provides market and other up to date information to household. It has expectation to increase household productivity. Strong extension service delivery has positive effect on households’ income and poverty reduction. The variable takes dummy for those
the fact that it is a major hub that attracts people’s attention provides it with a huge pool of investors and one of the financial instruments investors engage in is derivatives (UAE government, 2009).. ‘A derivative is a financial instrument which is a contract between two parties that derives its price from an underlying asset’. Usually, the worth of the principal asset changes continuously as time goes by. These underlying assets could be bonds, stocks or even interest rates. Derivatives are used for hedging and mitigating risks that arise from foreign exchange and commodity dealings. They assure buyers of protection whether or not the type of derivative’s value increases or decreases during the time as specified in the contract (Dubai Islamic Bank, 2013) .
Also, derivatives trading may make a complete the capital market. If, in a market, there is an information asymmetry or market friction, then arbitrage strategies using derivatives give a much opportunity to get profit and hence discover the fair price of product. Therefore it helps to capture the information that is not easily available and hence converge to complete the financial market. On the other hand, derivatives trading may result in negative consequences. Many finance researchers investigate the following topic: (1) Does futures and/...
Interestingly enough, Warren Buffet maintains a sizable position in Suncor, and must obviously see benefit to their use of derivatives contracts to reduce the pricing risks of their continuing operations(Stempel&Lopez,2013). Based on the culmination of research covered in this report, the conclusions of Buffet(2002) can be placed into contexts. Specifically, despite the way in which the concentration and volume of derivatives securities traded present a serious risk to the global financial system as a whole, the actual risk presented is bound by the ability of contract parties to settle out their contracts through the offsetting of outstanding positions. While a systemic unwinding of the derivatives markets through settlement would indeed be painful, it would not likely represent as large a risk as its nominal profile suggests do to their offsetting positions.
In modern times, derivative products have become widely used tools to help investors, organizations and governments manage risk that could arise from factors like unstable commodity prices, changes in currency rates and interest rates in general. A derivative is an asset whose value is derived from the value of an underlying asset that is used to hedge a potentially risky outcome. These underlying assets include a wide range of effects, such as metals, commodities, energy sources and financial assets. Derivatives are evaluated on a balance sheet differently depending their type. This is due to the way they are bought, sold and traded.
To minimize asymmetric information, it would be preferable for Carson to use reporting system for transparency and in which all operations can be easily monitored. This can be done through a well detailed financial reports provided timely. b. If Carson really believes that its stock price will be higher, I suggest it to use credible information collected to anticipate and to counter major short positions taken by institutional investors. The risk will be bound especially to uncertainty which would be increased and even Expanded as Carson’s stock price over time could be adversely affected.
If he decides to decrease his ownership, there will be more shares actively traded and the liquidity of the market will go up. Wit... ... middle of paper ... ... And they investigate that the liquidity of financial markets affect the choice of capital production technology, per capita income and per capita capital stock, the level of financial market activity, the real return on saving, and welfare of steady state equilibrium. By pooling and diversifying risks, by increasing liquidity or by reducing monitoring costs, financial markets and institutions are believed to have a positive impact on growth because they divert investments towards more productive activities or increase the flow of savings (Blacburn and Hung, 1998). Levine (1997) illustrates the role of finance in the growth by comparing between German bank-based system and United States securities market-based system. Which is called the “Functional Approach “.
For the current case where the committee now wanted to invest internationally, fund manager or committee had to possess the knowledge on hedging against exchange rate risk with currency ETFs. There’s is no deny that investing internationally such as on stocks and bonds which will generate large amount of returns and also provide a greater degree of portfolio diversification, but there is also risk from the exchange rate. By engaging in exchange-traded funds (ETFs), the fund can enjoy benefits which will make the fund more liquid and versatile so that the fund enjoys more benefits with lesser risks.