...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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...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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...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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...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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...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 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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...Complexities of the U.S. Financial System Vicki Cooley Joseph Arbeiter Principles of Finance Complexities of the U.S. Financial System Vicki Cooley “A financial market is a market in which individuals and businesses are given the opportunity trade financial securities, commodities, and other fungible items of value at low costs and at prices that reflect the current supply and demand. Securities include stocks and bonds. Commodities include precious metals or agricultural goods.” There are both general markets (where many commodities are traded) and specialized markets (where only one commodity is traded). Markets work by placing many interested buyers and sellers, including households, firms, and government agencies, in one "place", thus making it easier for them to find each other.” “The U.S. Federal Reserve plays the role of controlling inflation by managing credit, the largest component of the money supply. The Federal Reserve has the power to restrict credit by raising interest rates and making credit more expensive. This process reduces the money supply, which curbs inflation.” “The Board of Governors, or Federal Reserve Board, is the controlling body of the U.S. Federal Reserve. The Federal Reserve Board, made up of 7 members appointed to staggered 14-year terms. The Board is allowed by both the executive and legislative branches of government to operate with a great deal of independence. The Board is in charge of overseeing the policies that regulate the commercial...
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...of the U.S. Financial System Strayer University Principles of Finance 100 Professor T. Nhira November 5, 2014 Complexities of the U.S. Financial System Financial markets impact many things in people’s everyday lives, and in most cases they do not realize the effects. Financial markets impact the economy, business, and individuals and ways that are often overlooked. Furthermore, the Federal Reserve also plays an important role to the financial markets and their fluctuations. In addition, interest rates make a huge impact on the entities mentioned above. All of these things tie into the financial markets and the way they affect everyday life. The U.S. financial markets impact the economy, business, and individuals by helping direct the flow of savings and investments throughout the economy in ways that facilitates the increase of capital and the production of goods and services. The worth of credit and returns on investment provide helpful signs to producers and consumers. These helps direct funds from savers and business to the consumers, government, and other type of investors. Also, the existence of healthy financial markets and institutions accelerates the international flow of funds between countries, helping the local economy. This allows investors to compare the cost of financing to their anticipated return on investments, so they can make the correct investment choice that better suits their needs (frbsf.org, 2014). The role of the U.S. Federal...
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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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...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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...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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................................................ The Financial Sector Assessment Program (FSAP) ............................................. The Reports on the Observance o f Standards and Codes (ROSC) ....................... The Financial Sector Reform and Strengthening Initiative (FIRST) .................... The Financial Sector Reform and Strengthening Initiative (FIRST) .................... Combating Money Laundering and Terrorist Financing (AML/CFT) ................. Debt Sustainability & Debt Management ............................................................. Social Protection................................................................................................... A. B. C. C. D. E. F. ANNEX Accounting and Auditing ........................................................................................... Corporate Governance ............................................................................................. Insolvency and Creditor Rights ................................................................................ 22 28 33 2 INTRODUCTION 1. In response to major financial crises in the 1990s, the international community embarked o n a range o f initiatives to help prevent crises and to manage them in the event that they nevertheless occur. This framework i s referred to as the International Financial Architecture (IFA). 2. Lessons drawn from the aftermath o f those financial crises underscored...
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...today's viewpoint Financial Crisis It’s commonly believed that the financial crisis happened during 2008~2009 is one of the most serious financial events in human history. A collapse of the US sub-prime mortgage market and the result of the housing boom in other industrialized economies have had a ripple-effect around the world. Furthermore, the other failures in the global financial system have surfaced. Some financial products and instruments have become so complex and twisted, that as things start to unravel, trust in the whole system started to fail. All of this comes at a price From 2006 to 2009, our economic world have been changed. Comparing the activities of 2006 and 2009. first, real GDP was essentially unchanged, making 2006-2009 the worst three-year period science 1946-1948. in spite of an essentially zero increase in production for the 2006-2009 period, personal consumption grew by almost 2 percent. however, private investment fell by more than 30 percent. on the other hand, the banks charged off $27 billion in bad bet for 2006, but this exploded to $191 billion in 2009. personal and business bankruptcies field in federal courts accelerated dramatically over the 2006-2009 period, with personal bankruptcies increasing by 136 percent, while business bankrupts increased by 209 percent. Since the outbreak of the financial crisis, the American banking system and the whole financial industry's problems have been exposed: many United States financial institutions went...
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