Margins and Daily Settlements Marking to markets Margins are important aspects of future markets as they are used to operate in between investors, which got in touch and agreed to trade an asset in the future, to avoid contract defaults. In their cooperation there may appear obvious risks, as e.g. one of the investors regrets the deal and tries to back out. Therefore the exchange must be organized to prevent these situations. EXAMPLE of how does it work Investor Thursday June 5 -> contacts
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1. One point of concern for you is that there is a trade-off between the higher interest rates in Thailand and the delayed conversion of baht into dollars. Explain what this means. ANSWER: If the net baht-denominated cash flows are converted into dollars today, Blades will not be obligated to depreciation in the future; in the end, there would be a decrease in the dollar cash flows and a depreciation of the baht. 2. If the net baht received from the Thailand operation are invested in Thailand
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FINANCIAL ENVIRONMENT Components of Financial Environment Financial environment consists of three main components * Financial Managers who determine how to invest a firm’s funds to capitalize on potential opportunities. They also determine how to obtain the funds needed to finance their respective firms’ investments. * Financial Markets that facilitate the flow of funds from the suppliers of funds to firms or governments who need funds. Financial institutions serve as intermediaries
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Chapter 15: Understanding Accounting and Financial Statements Introduction The purpose of this chapter is to identify some of the concepts of Understanding Accounting and Financial Statements in the business world. Learning objectives 1. Explain the functions of accounting, and identify the three basic activities involving accounting. 2. Describe he roles played by public, management, government, and not-for-profit accountants. 3. Identify the foundations of the accounting system
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Explain why market prices are useful to a financial manager. It certainly depends on what industry you are in. A finance manager needs to know the price of things and getting a good handle on the market prices is a very good start. There is nothing more valuable to a shareholder or a director than a finance manager that saves the company heaps of money. Managers are interested in market prices for reasons better explain by market of economic theory. The classic market of economic theory is a call
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company’s shareholder wealth is equal to the number of shrares outstanding times market value per share. * We need to know what factors affect the stock price. * The value of a share of stock is the present value of the cash flows an “average investor” expects to receive in the future id he or she bought the stock. * Long-term view important. Market price VS intrinsic value Stock’s market price: actual market price of the share of stock. Value based on perceived returns and risk. (could
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for Business Week two individual assignment chapter fourteen questions April 5, 2010 |14-1. What are financial markets? What function do they perform? How would an economy be worse off without them? | | |According to T.E. Copeland, J.F. Weston (1988),” a financial market is a mechanism that allows people to easily buy and sell (trade) | | |financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other
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highly developed and efficient financial system is essential to ongoing economic growth and prosperity. Discuss the component parts that form a financial system and the relevance of the above statement. A financial system consists of financial institutions, financial instruments and financial markets. Financial institutions are classified into five categories according to where they source their funds from and who uses their funds. These include: depository financial institutions e.g. banks; investment
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economy of any country depends mostly on the establishment of sound, effective and efficient financial system in that country. A well-developed financial system plays an important role in accelerating economic growth by mobilizing savings and facilitating investment in an efficient manner (Mu, 2007). Financial market is composed of different markets- Money Market, Capital Market, Derivative Market etc. All the markets play an interactive role for the development of economy by formation of capital through
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Prepare a glossary for the terms below: Financial market - A financial market is a market in which people trade financial securities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand. Securities include stocks and bonds, and commodities include precious metals or agricultural goods. Financial instruments - Financial instruments are tradable assets of any kind. They can be cash, evidence of an ownership interest in an entity, or
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