Sample BUS 422 Assignment Presentation

BUS 422 Assignment

  1. Explain the statement, “A financial claim is someone’s asset and someone else’s liability”?

A financial claim is an economic tool that an individual has on another. The monetary claim turns into an investment to the individual who purchases or owns it, however remains a monetary liability for the association or corporation that vended or delivered it. Actually, a monetary assert alludes to a financial statement or assert that is owned by a party. Typically, the monetary assets have no inherent worth on its own, however they make it easy for the proprietor to merit from unremitting revenue or ownership of asset. Fiscal responsibility is the duty of a property issuer to the owner of the property. The issuing of a monetary instrument is to make it easy for the issuer to obtain fund for expenditure.

  1. Explain concept of financial intermediation. How does the possibility of financial intermediation increase the efficiency of the financial systems?

Financial intermediation alludes to the procedure of directing savings to investment utilizing monetary intermediaries. The whole procedure engages two agreements, which are an IOU issued by the person making savings or supplier of funds as well as the accomplishment of a loan that is direct safety from a lender or debtor. Financial intermediation surges the proficiency of monetary systems by modifying treaties to satisfy the needs of the clients. On top of this, the intermediary holds the danger of monetary investment mounting profits to the investors.

3.Why is denomination divisibility an important intermediation service to the typical household?

Typically, families lack ample funds for investments in open credit markets including a least possible $1 million. Consequently, financial mediators offer ways for indirect investment via lesser denominations of monetary statements. On the other hand, the families would be obligated to amass the necessary least sum of money prior to investing in direct credit markets.

  1. Why are economies of scale important to the viability and profitability of financial intermediaries?

Economies of scale are quite essential for the sustainability as well as success of monetary intermediaries as they present an extra merit over states, corporate bodies as well as families providing monetary services. A good example is a case where the estimated cost decrease with a rise in the size of transaction, the monetary intermediaries can take part in denomination inter-mediation.

  1. Explain the differences between the money markets and the capital markets. Which market would General Motors use to finance a new vehicle assembly plant? Why?

The duration it takes for securities to mature is the core difference between capital markets and money markets. Money markets allude to the associations as well as procedures that take care of businesses undertake in the short-term and are handed out by borrowers and hold high credit rates. Short term denotes to the duration of less than one year. In contrast, capital markets are organizations and processes offering for monetary trades in the long-term tools. Long-term infers to a duration that is more than one year. GM is probable to make use of capital market as it has a efficient security exchanges.

  1. What is the prime rate? Why do some banks make loans below the prime rate?

Prime rate is a word utilized to allude to the interest rate that majority banks utilize as an assessment point for lending in most nations. At times, banks generate loans lower than the prime rate when the economy is quite slow or they are attempting to sustain a strong economy.

  1. What do we mean by “off-balance-sheet” activities? If these things are not on the balance sheet, are they important? What are some off-balance-sheet activities?

Off-balance-sheet undertakings allude to the corporation funding that are not accounted on the balance sheet of the organization. Corporation usually take part in off balance sheet undertakings with a motive to sustain their debt equity ratio a lesser level and thus seem as if having less debt. These actions are essential as they let corporations to be more credit worthy than it would seem in real sense. Samples of these actions are loan sales, fees as well as other derivatives.

  1. What is the essential difference between the Keynesian and the monetarist view of how money affects the economy?

The vital diversity between the Keynesian and the monetarist outlook of the impact of money on the economy is founded on joblessness as well as the impact on production. The Keynesian perception suggests that lack of jobs lessens revenue, thus lessening use as well as the total actual production.  On the contrary, the monetarist insight asserts that permanent revenue could be apparent yet latest receipts stay unclear. It posits that a surge in joblessness would only cause adjustment in receipts however will not lessen production or consumption.

From the article provided what are five stages of global financial crisis?

  1. The financial crisis had five stages that affected the worldwide economy since the 2008 depression. The stages include:
  • The collapse of the market for submarine mortgage
  • Spillovers into the widespread credit markets
  • Liquidity predicament taking place because of fallout of Northern Rock
  • Bear Stearns and the Lehman Brothers experiencing counterparty risks on other monetary institutions
  • The eventual demise of the Banks in the US markets.
  1. What was the impact of global financial crisis on UAE economy? Why have UAE been affected? How have UAE overcome (4 points)?

The UAE economy was unfavorably impacted by the worldwide monetary disaster. For example, the acute fall in the costs of Dubai’s real estate as well as oil cost the UAE economic development. The UAE economy was impacted as the worldwide market of oil that adds up chiefly to its stability was impacted. General public reduced their disbursements conducts such as travel needs. To survive and recuperate from recession, the UAE made use of its former economic steadiness as well as domestic capacity to handle the GFC difficulties.

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