a. "Financial intermediaries play a crucial role in an economic crisis-they are responsible for both causing the market to crash and then helping it recover from the crisis." Is this statement true? Discuss with an example. b. What are the risks and rewards of investing in the stock market as compared to the bond market?
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- a. What are the risks and rewards of investing in the stock market as compared to the bond market?b. “Because corporations do not actually raise any funds in secondary markets, they are less important to the economy than primary markets.” Comment.Which is correct about financial securities?a. Financial securities guarantees return to investors.b. Financial securities eliminate risk that most financial managers are facing.c. Diversification spreads risk and improves expected total return.d. Financial securities protect investors against risk shocks brought by social, economic, and politicalevents.e. All of the abovef. None of the above1) What id the essential purpose for financial markets? 2) Which is more important, the primary market for stocks of the secondary market? Why? 3) How does a ponzi scheme work? 4) Discuss some of the forces that help make markets efficient? 5) What are institutional investors? Why are they needed in our economy? 6) What are some of the differences between a forward contract and a future contract?
- Financial intermedires play a crucial role in an economic crisis they are responbile for both causing The market to crash and then helping it recover from the crisis is this statement true?Discuss with an exampleFactors in financial crises include : a. The existence of hedge funds and tax havens b. A stock market correctionc. A decrease in interest ratesd. all of the aboveIf ABC Bank’s ALCO targets the market value of shareholders’ equity in its interest rate risk management, is the bank positioned to gain or lose if interest rates fall? If interest rates rise by 1% for all assets and liabilities, what is the approximate expected change in the bank’s economic value of equity? Provide a specific transaction that the bank could implement in order to immunize its interest rate risk exposure.
- “Financial intermediaries play a crucial role in an economic crisis–they are responsible for both causing the market to crash and then helping it recover from the crisis.” Is this statement true? Discuss with an example.Investing in stocks and bonds are different because: A) With stocks, the expected return is important, while with bonds, the expected return as well as the risk level are important. B) With both stocks and bonds, we become owners of the company, although stocks give us a bigger say in the company. C) With bonds, we look at the credit rating and the yield, while with stocks we compare the market price to the intrinsic value when investing. D) None of the above.Was the creation of the subprime issue good for the stock market or bad (trick question?)? Good for the ECONOMY or bad? Elaborate as to why or why not.
- financial intermediaries play a crucial role in an economic crisis-they are responsible for both causing the market to crash and then helping it recover from the crisis. is this statement true?he concept of market efficiency underpins almost all financial theory and decision models. When financial markets are efficient, the price of a security—such as a share of a particular corporation’s common stock—should be (equal to or more than) the present value estimate of the firm’s expected cash flows discounted by its appropriate rate of return (also called the intrinsic value of the stock). Almost all financial theory and decision models assume that the financial markets are efficient. The informational efficiency of financial markets determines the ability of investors to “beat” the market and earn excess (or abnormal) returns on their investments. If the markets are efficient, they will react rapidly as new relevant information becomes available. Financial theorists have identified three levels of informational efficiency that reflect what information is incorporated in stock prices. Identify the form of capital market efficiency under the efficient market hypothesis…After the global financial crisis, are investors operating in the securities markets more cautious in making investment decisions, or do they more thoroughly analyze the investment risk of investing in capital markets?