Questions tagged [financial-markets]

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1answer
23 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 & ...
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1answer
24 views

CAPM and beta for individual stocks

Why do we just assume that the beta is constant for a stock? Could it not very well be the case that the beta is 1.2 in a bear (baisse) market and 0.8 in a bull (hausse) market for an individual stock,...
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1answer
58 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 ...
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1answer
20 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 ...
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2answers
57 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
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0answers
30 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
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1answer
49 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 ...
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0answers
43 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
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1answer
33 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 ...
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1answer
24 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 ...
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2answers
56 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. ...
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0answers
37 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 (...
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1answer
62 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
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0answers
34 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 ...
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1answer
36 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? ...
1
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1answer
47 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 ...
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1answer
36 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(...
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0answers
24 views

Value relevance, informative information, Financial statements, IFRS 9

What are the theories that say that the disclosures in the annexes of the report and accounts are less relevant than the figures in the financial statements, is there anything? I've been looking for ...
2
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1answer
211 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 ...
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1answer
31 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 ...
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0answers
27 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.: ...
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1answer
24 views

What are financial service “passports”?

What are “passports” in the context of financial services? I have also heard the term “passporting rights.”
2
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1answer
49 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 ...
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1answer
31 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. ...
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0answers
31 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 $\...
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1answer
68 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 ...
3
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3answers
142 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?
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1answer
136 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
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1answer
56 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?
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2answers
418 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 ...
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2answers
6k views

How to calculate average buy price when you buy, sell and rebuy

I wanted to get my avaerage buy price for some stocks I bought and see if I made money. So far for just buying and then later selling I have been calculating the avaege buy price using this formula <...
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1answer
65 views

World Stock Markets that went up in 2008

We all know that the US stock market(s) collapsed in price in 2008, see https://en.wikipedia.org/wiki/United_States_bear_market_of_2007%E2%80%9309. I was wondering what countries' stock markets went ...
5
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3answers
346 views

Are cryptocurrencies a ponzi scheme or a bubble?

Several users in this forum have addressed bitcoin and other cryptocurrencies as ponzi schemes. Bitcoins have several uses which could legitimate its value as a currency, but also have received ...
0
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1answer
18 views

Gold charts on different currencies

I have this two charts of gold prices for the last 60 days. One is in Dollars and the other in Euros. Why they are not an exact match?
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0answers
12 views

Graph of liquidation of trade versus price of commodity

Suppose I want to open a long position (that which increases in value as the commodity goes up in value) in some commodity whose price at the time of opening the trade is, say, $p$. The position is ...
0
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1answer
31 views

Financial markets predictions [closed]

How do economists/investors predict supply and demand in financial markets such as indices, currencies, etc?
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1answer
22 views

Why are most of open market orders so far from the mid price?

Say there is an exchange with open buy and sell orders, why are there so many orders placed. So far away from the mid price. So for example is lowest sell order is say 1.01 and highest buy order is 1....
2
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1answer
779 views

Why obligation acceleration triggers Credit-Default Swaps (CDS)?

ISDA Credit Event definitions state that CDS can be triggered in an event of Obligation Acceleration. What does that mean? If for example, a country pays a bond 1 year prior to maturity are CDS ...
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2answers
232 views

Monthly average rate of discount, 3 month Treasury bills, Sterling Vs 1 Month

I have been advised by one of my professors to use UK treasury bills for a risk free rate when calculating expected returns for stocks. I wanted to know whether I should be using 1 month T-Bills or 3 ...
1
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1answer
23 views

What aspects of macroeconomics should I address for convincing an investor to invest in a certain country? [closed]

I have a task at my internship which is to write 2 pages about the economic conditions in my country. My question is what I could include in my research. Surely, I'll address inflation, currency ...
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2answers
63 views

Market crash causes

Does market crash like in 1930 and 2009 are always due to excessive and careless lending activity? Lets say all lending is done in careful manner and no corporate fraud is done somehow, would it be ...
0
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1answer
613 views

S&P 500 total return excel sheet

Where can I find an excel sheet with total return (that is, with dividend reinvestment) of the S&P 500? I have only found an online "calculator" (not an excel sheet), or an excel sheet with ...
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2answers
38 views

How long do stock markets usually take to process complex new public information?

Here is a question that I've been thinking about for a while: Theoretically, assuming investors are rational, a stock's price will be equal to its its intrinsic value (present value of discounted ...
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2answers
2k views

What is the difference between USD/EUR and EUR/USD when talking about Forex

I was recently watching the Forex market and I want to know what does it means when you see something like EUR/USD -0.04% -1.1208 Does that mean the USD dropped with 0.04% against EUR or vice versa?...
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1answer
240 views

How does a liquidity guarantee for Asset-Backed Commercial Paper used to finance a Conduit work ?

A liquidity guarantee was what a lot of banks used to insure outside investors payments if an asset in a Conduit defaulted. The way they were doing it was not really dispersing the risk evenly ...
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1answer
38 views

Can someone explain to me why no new bill exist to regulate financial derivatives yet? [closed]

Isn't it bad economically for soft regulation on financial instruments like derivatives.
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1answer
123 views

Does a stock market crash "undo” the multiplier effect's money creation?

The economy grows for multiple reasons, but one is the multiplier effect due to fractional reserve banking. When there is a crash, is that artificially created money essentially destroyed, resetting ...
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1answer
50 views

Find high resolution market data for a single ticker?

I'm doing my dissertation at the moment and for it, I need high-resolution market data. The only problem is I'm a student and haven't got much money. A lot of sites I have seen want monthly ...
2
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2answers
15k views

Difference between Unit and Share?

I was reading the ISO 10962 (the 2015 version) which classifies financial instruments. In the Collective Invesment Vehicle (CIVs) they separe them in: Standard Funds Hedge Funds REIT ETF Pension ...
4
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1answer
2k views

Difference between double auction and continuous double auction?

What is the difference between double auction and continuous double auction? Sometimes I feel that they were types of two-sided auction but sometimes I feel as if they were two separate concepts.