Questions tagged [financial-markets]
The financial-markets tag has no usage guidance.
119
questions
0
votes
1answer
22 views
Are retirement funds part of capital market?
Economical newbie, please do not laugh.
I was reading an article, which mentioned withdrawal of high sums (billions) from retirement funds to ease the crisis caused by the covid-19.
It also said that ...
1
vote
0answers
9 views
What underpins the argument that commercial paper is systemically important?
The Financial Stability Report recently had a paper on money market instruments and in one of the sections was a line that read:
CP rates enter as inputs into credit-sensitive benchmark rates, and
...
0
votes
0answers
11 views
How do I evaluate unlisted distribution companies and get their KPIs?
I am going to do a competitive analysis for 5 distribution companies, however, I could not find out their financial report as they are unlisted. If I need to figure out what they are best at for me to ...
1
vote
1answer
66 views
Was the financial crash of 2008 caused by top graduates of the American Ivy Leagues working at wall street banks?
From this article by Lisandro 'Leloy' Claudio, a Philippine/a Filipino professor of history, politics, South & Southeast Asian Studies (and not necessarily of finance, economics, mathematics or ...
0
votes
0answers
28 views
Understanding Mortgaged Backed Security during financial crisis
This is my understanding of the mortgage backed security.Banks will give loans to customers, and then they decide to sell the loans to investment banks and charge a fee with it to earn profit. Now the ...
0
votes
0answers
17 views
Explain the statement: "Due to international capital mobility, S and I should not move together."
I read this statement in ADB's e-course on financial globalisation. I have basic knowledge of the economics, but nothing too advanced.
So, what I understood is that since in there is much greater ...
0
votes
0answers
18 views
Are short squeezes becoming more common, and if so, why?
This year I have read about short squeezes more often than any time in the past. Are short squeezes becoming more common, and if so, why?
0
votes
1answer
47 views
Are there any notable exceptions to the Impossible Trinity theory?
I am referring to the theory presented on Wikipedia and The Economist that states:
The impossible trinity (also known as the trilemma) is a concept in international economics which states that it is ...
1
vote
1answer
94 views
Evidence for or against the Efficient Market Hypothesis in financial markets and the currently dominant view
The Efficient Market Hypothesis seems to draw quite a lot of attention in popular debates, and in general during discussions on Behavioral Finance, where it is often seen as not entirely correct.
I ...
2
votes
0answers
13 views
Quote or price driven markets
Where can I find some details about quote driven markets? Can anybody show any notes or provide some paradigm about what the trader sees when he is about to trade in such a market? They say that he/...
4
votes
0answers
34 views
Order-driven vs quote-driven markets
What is the difference between order driven and quote driven markets? Is there any theoretical microstructure book that gives the intuition behind the types of markets with respect to the orders that ...
0
votes
2answers
77 views
Is the fundamental analysis also a self-fulfilling prophecy?
John J. Murphy in the first chapter of his book "TECHNICAL ANALYSIS OF FINANCIAL MARKETS" says that concerns regarding fundamental analysis being a self-fulfilling prophecy are seldomly ...
0
votes
1answer
65 views
Why are shares exempt from GST?
Why is the financial trading sector exempted from consumption taxes?
For example, shares seem to be exempt from GST in both Australia and Canada. What is the intention behind this? Is it common for ...
0
votes
2answers
84 views
Why do stocks that don’t pay any dividends change price when the company does better?
I don’t understand why (non-dividend paying) stocks increase in price when a company is successful; is it just because everyone expects that everyone else will find it more valuable because the ...
1
vote
1answer
48 views
Does the Fed/SEC have tools to address shock-propagation from correlation of fund flows?
Premise
In 2017, passively invested assets totaled 37% of mutual funds and ETFs; by 2021 this number is closer to 50% if not more. After the market downturn in (March) 2020, the Fed updated their ...
1
vote
1answer
438 views
Why is South Korea classified as an Emerging Market economy?
I have recently found out that South Korea is part of the MSCI Emerging Markets Index, and that the South Korean Won (KRW) currency trades as a non-deliverable currency. Furthermore, the South Korean ...
1
vote
0answers
27 views
What is the intuition for the potential loss of market makers on LS-LSMR?
What risk do liquidity providers take on when they provide liquidity to an LS-LSMR automated market maker pool?
How much can they lose?
1
vote
0answers
22 views
Why Hanson's logarithmic scoring rule define an Automated Market Maker?
Why Hanson's logarithmic scoring rule define an Automated Market Maker?
We have in this paper
in page 47, section automated market maker, that this scoring rule can "easily" be turned into ...
0
votes
1answer
34 views
why federal fund rate vs treasury bond yield generally move in the same direction?
My own thought is, if the fed lowred federal fund rate, peoole should look for investment with greater return, like treasury bond. More demand=decline in yields but why do they generally move in the ...
1
vote
3answers
139 views
What is the correct way of calculating the "average" price based on the "Open,High,Low,Close" daily trade fields?
Open,High,Low,Close
I have these fields, representing the "opening" amount, the highest for the day, the lowest for the day, and what it closed at.
I'm trying to determine the "average&...
1
vote
2answers
106 views
Where does investment originate from in the circular flow model?
The above image is from my macroeconomics textbook.
I’m struggling to understand the “financial markets” corner. If financial markets refers to banking and perhaps the stock market, is it true that ...
3
votes
1answer
55 views
Literature on DSGE models featuring a financial sector
I recently read a ECB primer on DSGE models featuring the financial sector and became interested in the field. I also started to read some of the earlier literature in that field (e.g. Gertler & ...
1
vote
2answers
56 views
CAPM and beta for individual stocks
Why do we just assume that the β is symmetric for a stock? Could it not very well be the case that the β has a larger leverage (covariance with the market) for example 1.2 in a bear (baisse) market ...
2
votes
1answer
70 views
Volatility and the stock market
In general, it is known that market volatility increases during bear markets while it decreases during bull markets. Why is this the case? It seems strange that volatility is linked to the the general ...
1
vote
1answer
24 views
Theory behind financial flows not going to the most developing nations even though they have the highest growth rates
I remember reading a bunch of articles on this a few years ago, but I can't find any of the references any more.
It has been a while since I looked at this, so here is a rough paraphrase of the ...
2
votes
2answers
71 views
What does the Fed mean by "smoothening money market functioning"?
In many recent interviews, Fed Chairman Jerome Powell has repeatedly mentioned that ensuring the smooth functioning of money markets is a key goal of the Fed's recent monetary policy actions. I want ...
2
votes
0answers
37 views
Does the federal reserve create any type of deadweight/welfare loss?
In microeconomics, we learn that when a good is overproduced or under produced, there is a dead weight loss associated with it. It seems like the same concept would apply to macroeconomics, where the ...
1
vote
1answer
113 views
How does the GDP multiplier work?
When we learn about the GDP multiplier, it is portrayed as 1/MPS, because savings are supposedly a leak out of consumer spending. However, what I don't understand is aren't those savings spent anyways ...
1
vote
0answers
44 views
Why Does Deficit Spending Work Without a Liquidity Trap?
My understanding is that in a functioning economy, the financial market clears when the nominal interest rate is above zero. It is only when it reaches zero that a liquidity trap occurs and the ...
1
vote
1answer
42 views
What value do virtual traders of commodity add to the market?
Many if not most companies trading in commodities are only trading them on paper. They will not use the commodity they are buying and can not take deliver of the physically commodity.
What value do ...
0
votes
1answer
26 views
CDO and Nonpositive Equity Questions
I have two questions about statements made in this video: https://www.khanacademy.org/economics-finance-domain/core-finance/money-and-banking/bank-bailout/v/bailout-2-book-value
At 6:25, the video ...
1
vote
2answers
58 views
If a CDS is x%, why does this mean $(1 - x)\%$ probability of default?
At 11:52, Tim Bennett says:
Well let's have a look at
11:52
some prices. Currently the cost of
11:57
insuring Greek debt is in excess of
12:02
$\color{green}{2,000}$ basis points. ...
1
vote
0answers
39 views
How to Calculate Bond Yields
According to Bloomberg, the coupon rate on a 10-year UK government gilt is 4.75%. Bloomberg also states that the yield is currently 0.47%, and the market price £144.57.
The UK Debt Management Office (...
0
votes
1answer
69 views
Understanding Bond Yields
According to Bloomberg, the coupon rate on a 10-year UK government bond is 4.75%.
Bloomberg also states that the yield is currently 0.55%, and the market price £143.51.
But if the following formula ...
2
votes
0answers
38 views
Convex transaction costs
Why do we assume convex transaction costs in theoretic models? What is the intuition and the strict definition of this assumption?
Well, I have in mind the Glosten model in 1994. Neither he provides ...
0
votes
1answer
49 views
Why'd the lender suffer the collateral haircut, not the borrower?
In the quote below, why'd Steve offer $10.5, when your Air Jordans are worth \$11? Why wouldn't Steve (the lender) assign the collateral haircut to you, and require you to pay him \$11 + risk premium? ...
2
votes
1answer
80 views
Beginner wanting to learn about economics/finance to explore career options?
I want to explore the banking/financial industries more for potential career options, can you recommend any books/ free online courses and sources in general as a starting point to build on my ...
1
vote
1answer
38 views
What's the special notation?
I'm studying "ALGORITHMIC AND HIGH-FREQUENCY TRADING". Page 249 of it tries to find a formula for $h(t,q)$. First, it supposes $h(t,q) = \bar\kappa log \space\omega(q,t)$ then let $\omega(t)=[\omega(...
2
votes
1answer
567 views
Competitive vs complete and non-competitive vs incomplete marekts
The very insightful questions that arise, when someone studies micro foundation are the following: What is the difference between competitive and complete marekts? When we refer to the first is it ...
1
vote
1answer
45 views
What are good books about financial markets?
I found answers on this question online but people always recommend books for beginner investors who want to become rich. I just want book that is about history and role of financial markets and book ...
0
votes
0answers
28 views
demand for money
I am currently studying the demand for money by Blanchard. this model assumes that the amount of money held is basically related to transaction levels and the the attractiveness of bonds.
i.e.: ...
0
votes
1answer
26 views
What are financial service “passports”?
What are “passports” in the context of financial services?
I have also heard the term “passporting rights.”
2
votes
1answer
50 views
Can futures buying/selling distort price discovery?
How credible is the suggestion that specific parties distort price discovery (rig the market) of a given asset by buying/selling corresponding futures contracts or any other derivatives.
Should these ...
2
votes
1answer
39 views
What data/factors/attributes do the professionals monitor in a top-down analysis on the macroeconomics?
I am learning to do top-down analysis on a number of sectors in the US equity markets. I have never done it before and I would appreciate it if some professionals can share their experiences with me.
...
2
votes
0answers
33 views
Showing that a market model has arbitrage and describing martingales
This is an exercise which I came upon while studying an introduction to financial mathematics.
Exercise :
Consider the finite sample space $\Omega = \{\omega_1,\omega_2,\omega_3\}$ and let $\...
-1
votes
1answer
76 views
What are the arguments for banning insider trading?
I can't see any economic argument for banning insider trading. In general, the point of allowing financial securities to be traded is to ensure that they are properly valued. "Insiders" seem better ...
2
votes
3answers
175 views
Why is a Normal Yield Curve a sign of a healthy economy?
I think the question is pretty self explanatory. I'm just trying to understand the logic behind why an upward sloping yield curve indicates a good economy?
-2
votes
1answer
166 views
Why do ONLY Indian staffing/"consulting" bodyshops flood the US job market?
Why do ONLY Indian staffing/"consulting" bodyshop agencies flood the US job market, and why do they flood ONLY the US?
This is definitely not just "Well, many Indians have at least somewhat ...
5
votes
1answer
60 views
Are stock exchanges market makers?
Are stock exchanges like NASDAQ and NYSE market makers? In other words, are they providing liquidity by pairing individual buyers and sellers with each other in real-time? Or does it work differently?
0
votes
2answers
865 views
How does IS-LM model reduced investor confidence?
I am doing an essay on how a sovereign debt rating downgrade to junk status affects the economy. I wanted to use a theoretical framework to think about it, and seeing as an increase in the interest ...
