...Complexities of the U.S. Financial System Dr. Marcus Crawford Strayer University, School of Business Complexities of the U.S. Financial System How Do U.S. Financial Markets Impact Individuals? The effects of a collapsing market can effect individuals in several ways. One of those ways is savings. As a result of a declining economy, money becomes more precious, as commodities take precedence over luxuries. College funds, for example, is one of these luxuries. The need to pay for everyday expenditures, such as food, and utility bills, can outweigh the need to save for a child’s college education. As a result, not only may the deposits come to a halt, but withdrawals, may become a common occurrence as well. Individuals may also stop saving for retirement in this same manner, as well. How Does the U.S. Financial Market Impact Businesses? When the market crashes, businesses usually feel its effects immediately. As stated earlier, luxuries, such as dining out, for example, become non-existent, and sales start to decline. Since most businesses have their assets tied into mixed equities, these assets, can be dissolved, quite rapidly. Business begin pulling back on employee benefits, to include health care, dental plans, and matching retirement. To also make up for these losses, companies in cut other expenditures, such as payroll. Usually employees are laid off, to compensate these deficits. How Does the U.S. Financial Market Impact the Economy? With the market...
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...Complexities of the U.S. Financial System Briefly describe one (1) way the U.S. financial markets impact the economy, one (1) way the U.S. financial markets impact businesses, and one (1) way the U.S. financial markets impact individuals. Companies sell stock to raise money. Once a stock begins trading in the secondary market, its change in price has no direct effect on the company that issued it. Regardless of the wavering of the stock price, the issuer would still have the money raised to fund their company. Without a doubt, every company wants to see their stock prices rise. Despite mixed opinions, there is a strong positive relationship between financial market development and economic growth. The markets help to efficiently direct the flow of savings and investment in the economy. Credit-rating agencies are known to be influenced by stock prices, and their decisions have a large effect on the availability of credit to the firm. Regulators, who take actions that affect firm cash flows (most prominently, in the case of banks), follow market prices very close. Business owners with good ideas are constrained by the amount of capital they can raise. Although they can use their own money and borrow from their family and friends, these are limited sources of capital. Eventually, as they desire to grow their companies or reach their potential, they have seek to fund-growth using other people’s money. They can borrow from fellow citizens under a contractual obligation to pay...
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...Assignment 1: Complexities of the U.S. Financial System Brandi Hays Professor Umair Warsi FIN100 February 1, 2015 The impact of the US financial markets on economy is quite high. This is because of all the major companies that are listed in the Stock Market contribute towards the economic growth of the country. When their performance deteriorates, their overall rating in the Stock Market suffers a downward trend. Thus, it produces a negative impact on the US economy. Though, in some cases, the dynamics of the Stock Market has its own issues and does not produces any impact on the economy. When the global financial crisis occurred in the USA in 2008, the overall Stock Market crashed which showed a negative trend of the economy. Therefore, these issues reflect the impact of US financial markets on economy. The impact of the US financial markets on the businesses is even there. When the overall position of the market is favorable, the businesses experience a positive impact. Though, this is not a usual case because some businesses flourish purely on the basis of their performance not on the basis of Stock Market position. When the US financial markets perform well, the individuals in an economy also have confidence in many aspects. They are not hesitant to spend money on the goods and are able to borrow money from the banks in order to have various types of expenditures. In some cases, the negative position of the US markets discourages the consumer to spend money...
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...Assignment1: Complexities of the U.S. Financial System Synthia Reed FIN 100 Professor Lester Reid Strayer University May 5, 2013 Complexities of the U.S. Financial System The U.S. financial markets play a big role in the economy. If no one is investing in businesses, they cannot start up, or grow larger to meet the needs of the country or nation. The economy is directly impacted by the amount of stocks bought and sold each day. Before the U.S. stock market crashed in 1929, it was booming. Americans had invested so much money in France that when their economy rose, so did the U.S. It collapsed because Americans pulled their money out of France and put it in U.S. stocks. If everyone pulled their investments today, the same thing would happen. Businesses would fail, and the U.S. would go into more debt. The central bank of the United States is the Federal Reserve System controls the financial system, and is the most powerful single actor in the U.S. economy. The head of the central banking system of the U.S. is called the Chairman of the Federal Reserve. The chairman is appointed by the president of the United States and serves a four-year term with confirmation from the Senate, currently serving is Ben Bernanke. The Federal Reserve System has a total of seven board members including the Chairman. With the exception of the Chairman members serve a staggered fourteen-year term. The Federal Reserve Board of Governors is responsible for the monetary policy and serves...
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...Complexities of the U.S. Financial system There is a root behind all evil but there is also a solution to our economic problems. Have you ever thought about the process it takes for you to obtain a loan for your business, or who your personal bank might report to? Do you ever wonder exactly why are economy is in debt, how major business fail, or just exactly where does the bank get their money from or who what our country imports or exports? Well, the financial market is responsible for regulating all that you may have had questioned. The financial market is the electricity to our economy and without them, what would you do if the bank did not have your withdrawal available for you? Financial markets serve a purpose of creating a system for people to understand what controls their economic behavior. The market economy sets guidance as our economy revolves around goods and services. The main question is what purpose do financial markets serve? The financial market acts as a liaison between consumers and goods or services. To be more specific, the financial market would be the middle man- customers, finance, and goods/services. Take for example; a business wants to promote their product on a commercial- which might cost thousands of dollars. Financial intermediaries, like banks, will get involved and transfer capital by pulling savings from many consumers who might bank with this bank (Florida Internationl University, 2008, p.3). This process in return will create a new asset-...
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...The U.S. Financial System and its Complexities Principles of Finance Week 4 Assignment 1 Professor Neilson Olin Frye 7/22/14 The effect of the US financial markets on the economy is considerably high. Part of the reasoning behind this is that all the major companies listed in the Stock Market directly contribute in the economic growth of the U.S. When the individual company performance decreases, their Stock Market rating starts to trend downward. This downward trend develops a negative impact on the U.S. economy. The Stock Market (whose dynamics have their own issues) doesn’t always produce an impact on the economy. In 2008, the U.S. went through a global financial crisis. The Stock Market crashed and negatively impacted the U.S. economy. These issues show the impact of US financial markets on economy (Chong & Miffre, 2009). The U.S. financial markets even have an impact on the companies and business. When the U.S. financial market is in a favorable position, there is a positive impact on the businesses and companies but is not always normal, some businesses flourish solely on their performance and not on their position in the Stock Market (Gai, 2007). When the overall performance of the U.S. financial markets is positive, the consumer that makeup the economy also has a greater self-confidence in regards to the overall health of our country. The consumers are not as hesitant to spend money on their needed items, and the banks are more willing to loan...
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...Complexities of the U.S. Financial System For the past few years after the financial crisis the United States financial system has been going through many changes. The financial system has impacted several environmental aspects in the economy, federal regulation and individuals. One way the United States financial market can impact the economy is by the use of use of mutual fund improvements using it as a tool for price changes, which will trigger the effect, by identifying the strong outcome of market prices. The decrease in valuation leads to a 7% increase in acquisition, likelihood, relative to a 6% takeover possibility. In addition, globalization has an impact in the financial markets by reducing companies' cost of capital. Furthermore, globalization also helps improve corporate governance in a way that manager engagements are better aligned with stakeholder interests. This progress in corporate governance further contributes to a reduction in a firm’s cost of capital. Another impact on the organizations are the cost of raising resources in capital markets (its “cost of capital”). On the other hand, there are conditions under which globalization improvements itself has led to a decrease in United States cost of capital. Financial markets had not just impacted the economy, businesses, and individuals of the U.S. but also had an effect in the economy all over the world. The United States Federal Reserve have very important role in the expenditures system of the country...
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...According to Melicher & Norton “ the financial system is a complex mix of financial intermediaries, markets, instruments, policy makers , and regulations that interact to expedite the flow of financial capital from savings into investment.” ( Introduction to finance, p 11). Kimberly Amadeo defines financial markets as being the place where “ traders buy and sell stocks, bonds, derivatives, foreign exchange and commodities. These markets are where businesses go to raise cash to grow, companies reduce risks, and investors make money.” The financial market impacts the economy by providing confidence to investors and growth opportunities. If the investors are trust the system, they will buy more stocks in businesses which would allow the economy to grow. More jobs will be created and new goods and services will be provided to consumers. The financial market positively impacts businesses by allowing them to raise new capital to finance their growth and future investments. An initial public offering ( IPO) is the sale of stock by a company to the public which allows its to raise money by issuing either debt or equity. The financial market also impact individuals by allowing them for example to invest their savings such as 401K or IRA’s in the stock market in the hope of a better retirement. In the United Stated and most developed countries the financial markets are strongly linked to the political system of the countries. Financial markets are where investors can make it...
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...Financial markets in the U.S. are a major reason our economy is able to be so successful today. Our financial markets make a major impact on how our financial system operates and how we base our current economic performance. Financial markets consist of actions in conjunction with financial securities such as, bonds, stocks, options, future, and commodities like gold or housing. Financial markets stimulate the flow of capital expenditures, risk being taken in the stock markets, and also international transactions. Globalization and the success of our financial market has made other nations markets dependent on upon ours. Even the major crisis's in the financial markets inevitably effect our economy dramatically. Like the financial bubble in 2007, individuals and businesses to a massive hit, when the bubble burst in the housing market. The rising of the housing market, with banks giving out loans to about anyone that walked in and individuals who knowingly not able to afford them taking advantage of it, lead to complete fall of the housing market. The U.S. Federal Reserve is the major power in the monetary aspects of our country, and not only our country, but many other countries rely on it. The Federal Reserve, also known as our central bank of The United States, is undoubtedly one of the most influential and powerful establishments globally. The Federal Reserve System traditionally conducts monetary policy, regulates and supervises banks, oversees financial markets...
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...discrimination of any kind is unacceptable. Improper payments in any form is prohibited and in following this code they are complying with the “Foreign Corrupt Practices Act (Code).” Environmental compliance is eliminating hazards from the workplace that creates a safe and healthy work environment. When companies are adhering to the laws they are preventing themselves from lawsuits, fines and any negative publicity towards their company. Conflicts of Interest is important because this entails business courtesies. Complying with this rule insures that the employee’s private interest doesn’t interfere with the interest of the company and that business courtesies are handled by the proper channels so that the integrity of the business is upheld. Financial and Accounting Integrity is also an important aspect in a company’s code of conduct. Ruby...
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...Complexities of the U.S. Financial System/Assignment 1 Student's Name Professor's Name FIN 100: Principles of Finance December 2014 The U.S. financial markets definitely play a big role in the economy. Unless people invest in businesses, there is no way that they can get started. This is also how they eventually grow in the future in order to meet county's needs and demands. The amount of stocks bought and sold each day directly impact the economy. Prior to the United State's stock market crash in 1929, there was an economic boom. Many Americans had already invested a tremendous amount of money in France. Once the French economy inflated, so did the economy her in the United States. French economy crashed because Americans took their money out of France and put it in U.S. stocks. If that ordeal was to happen today, where all or most of Americans pull their investments, the same economic decrease would happen. Not only would businesses fail, the U.S. would go into even more debt than they already are. The financial market affects all individuals in many ways that we may not even realize. “Many believe that if you don't invest in the stock market, a stock market crash doesn't affect you. However, any average person loses money and opportunities all based off the stock market”.( How does the Stock Market Affect You?, 2011.). When the stock market begins to fall, employers start cutting back on employee benefits. These benefits can include health insurance...
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...ASSIGNMENT 1 – COMPLEXITIES OF THE U.S. FINANCIAL To purchase this Click here: http://www.activitymode.com/product/fin-100-wk-4-assignment-1-complexities-of-the-u-s-financial/ Contact us at: SUPPORT@ACTIVITYMODE.COM FIN 100 WEEK 4 ASSIGNMENT 1 - COMPLEXITIES OF THE U.S. FINANCIAL The U.S. financial system has many complexities and it is impacted by several environmental factors, including federal regulations and the economy. Write a two to three (2-3) page paper in which you: 1. Describe how the U.S. financial markets impact the economy, businesses, and individuals. 2. Explain the role of the U.S. Federal Reserve, the Federal Reserve Chairman, and Board, indicating its effectiveness in today’s economic environment. Provide support for rationale. 3. Explain how interest rates influence the U.S. and global financial environment. Provide support for explanation. 4. Describe how exchange rates may impact a business’s decision to operate in foreign markets. Click Here to Buy this; http://www.activitymode.com/product/fin-100-wk-4-assignment-1-complexities-of-the-u-s-financial Activity mode aims to provide quality study notes and tutorials to the students of FIN 100 Week 4 Assignment 1 - Complexities of the U.S. Financial in order to ace their studies. Activity mode - Best Home Work Tutorials FIN 100 WEEK 4 ASSIGNMENT 1 – COMPLEXITIES OF THE U.S. FINANCIAL To purchase this Click here: http://www.activitymode.com/product/fin-100-wk-4-assignment-1-complexities-of-the-u-s-financial/ ...
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...Complexities of the U.S Government Alphonzo W Brown Strayer University Fin 100 Professor Lewis Complexities of the U.S Government The U.S. financial system is very complex and it is impacted by several environmental influences, including federal regulations, fluxuation in world markets, and our economy. These factors not only affect the economy, but also businesses and individuals. The U.S. Federal Reserve, the Federal Reserve Chairman, and Board, also play a direct role into the effectiveness of today’s economic environment. Some of the complexities that impact the U.S. also have a direct influence on the global financial environment. These complexities include the interest rates and the exchange rate. The U.S. financial market has a major impact the economy, businesses, and individuals. Financial markets help to masterfully direct the flow of savings and investment in the economy in ways, that initiate the increase of capital and the production of goods and services. The worth of credit and returns on investment provide signs to producers and consumers. These signs help direct funds from savers and businesses to the consumers, businesses, governments, and investor. Also, the existence of healthy financial markets and institutions also accelerates the international flow of funds between countries. In addition, efficient financial markets and institutions tend to lower search and transactions costs in the economy. By providing a large range of financial products, with...
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...Complexities of the US Financial System The U.S. financial markets impact the economy, businesses, and individuals in a multitude of ways. Businesses are impacted by the U.S. Financial markets through investing. For instance, if the number of investors lowers dramatically businesses will have a hard time finding funds to grow their business or even start it up at all. Individuals who invest or trade are both positively and negatively impacted. According to Kimberly Amandeo, " The investors profit when the companies increase their earnings, which keeps the U.S. economy growing. Its easy to buy stocks, but takes alot of knowledge to buy stocks in the right company". If not done properly or funds are not pulled before a business fails, the individual- who may have their livelyhood riding on this- could lose everything. The investor is needed in order to keep businesses going. If individuals just decided to stop investing businesses would fail and the U.S. would fall into even more debt. The U.S. Financial market acts as a chain that connects the economy, businesses, and individual together and shows us just how well the economy is doing. If one is effected, both negatively or positively, so are the other two. The US Financial System is not limited to the financial and stock market. A Financial System is a composition of multiple financial institutions, markets, regulatory bodies, and depositors. A Money Market is where low-risk, highly liquid, short-term instruments are created...
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...Complexities of the Financial System Brandi Humphrey Professor Joseph Arbeiter Finance 100 January 15, 2014 Financial markets are defined as locations or electronic forums that facilitate the flow of funds among investors, businesses, and governments. There are four types of financial markets and they are; debt securities markets, equity securities markets, derivative securities markets, and foreign exchange markets. Financial markets are also known to facilitate the transferring of previously issued debt and equity securities from existing to new investors. Financial markets are where traders buy and sell stocks, bonds, derivatives, foreign exchange and commodities. U.S. financial markets impact the economy because it can influence prices, whether they increase or decrease. For instance when there is too much money in the real estate market, interest rates plummet. This caused peopled to take out loans, even if they were considered ineligible buyers thus creating unacceptable risks to investors who began selling them to get rid of them. This causes a crash in the real estate market and also leaves the investors high and dry. Finance is one of the most important functions of any business. Companies are financed in one or two ways; debt or equity. The definition of debt is the amount owed or that one is bound to pay to or perform for another and equity is defined as the funds supplied by the owners that represent their residual claim on the firm. Debt financing is a negative...
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