Questions tagged [financial-markets]

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9
votes
1answer
341 views

Financial Smart Contract on Ethereum: can an Ether Futures contract be priced in Ether?

BACKGROUND This is more in the wheel-house of economics than programming, but after a few different titles, I thought it best not to skirt around the root of my question OR create a oddly phrased USD ...
8
votes
1answer
159 views

Hedging with volatility swaps?

I'm studying financial derivatives, and became curiosity in volatility products, more specifically volatility swaps. It always intrigued me how can you create products based on volatility. Who is ...
7
votes
3answers
1k views

'No arbitrage' vs 'Efficient market'

I am trying to wrap my head around the 'no arbitrage' (NA) and 'efficient market' (EM) assumptions, in particular their difference. Please correct me if I am wrong, but NA just claims that there is ...
6
votes
3answers
93 views

Free source of large amounts of financial data

I am looking for a free source of large amounts of long term financial data on stocks, exchange rates, government bond rates, etc. I know there is Thomson Reuters, but this requires a costly ...
6
votes
1answer
46 views

What is the mix of maturities of outstanding US Treasury bonds called?

What is the technical term for the mix of maturities of outstanding US Treasury bonds? Also, is there an "official" source for this information? I tried searching to find out, but not knowing what ...
6
votes
2answers
206 views

What possible reasons could make arbitrage impossible between some markets?

What could prevent arbitrage (not necessarily risk-free) between some markets even when price differences exist?
6
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2answers
165 views

Unintended consequences from “fixing” the US financial system

Last year, I read the book The Bankers' New Clothes: What's Wrong with Banking and What to Do about It. The book explained some of the causes of the recent financial crisis of 2007-2009 and gave some ...
6
votes
2answers
759 views

Why is the Chilean economy so much better than the rest of the countries in South America?

Why does Chile have a better economy than all of the other countries in latin America? It is labeled as a high income country by the IMF, It is the only Latin American country that is part of the ...
6
votes
1answer
43 views

trading security volume that affects price

Curious if there's a formula for this. There are some notorious cases of software (accidentally) and people (purposefully) quickly unloading a given security, causing the price to (temporarily, ...
6
votes
2answers
115 views

How will London's role as a financial center be affected after the Brexit and what are possible alternatives?

I looked around on this site and couldn't find anything close to what I'm asking on Economics SE, so I hope it is the right place to ask. I am interested in but have no background in economy, so all ...
6
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0answers
54 views

Futures Market Books

Are there any recommendation for futures market or commodity trading books? I am not interested in trading myself, but would like to have a better understanding of it for my research.
5
votes
1answer
49 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?
5
votes
3answers
322 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 ...
5
votes
1answer
62 views

Why do money markets fluctuate so much?

Compared to commodity markets, money markets move a lot. My guess is that commodity markets are less elastic due to fixed production costs. But I don't know if that is the correct explanation.
4
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2answers
969 views

Financial Economics Textbooks

I have an interest in financial economics, and I plan to take the graduate sequence, however I did not take an undergraduate course in that field. I would really appreciate it if someone could ...
4
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1answer
195 views

Why does falling global bond yields signal coming deflation

In this article, it suggests that, "Bond markets are signalling something very nasty coming down the road at us – an all encompassing, worldwide deflation. " I cannot understand why bond yields ...
4
votes
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.
4
votes
1answer
111 views

Why is the term structure curve of agricultural commodities often downward sloping?

I have retrieved the below term structure curve for livestock (lean hogs) from Bloomberg and noticed that it is inverted. I have a vague intuition that this has to do with the storage costs and ...
3
votes
4answers
325 views

Why is gold a safe haven investment?

To me, it seems like gold is the ultimate example of something where the value should go down when the economy, stock market etc go down. Just like Ferraris, and other frivolous consumer luxury goods,...
3
votes
1answer
745 views

Free Data Source for Credit Spreads?

Credit spreads are a key economic indicator. They are the difference between yields on corporate and government debt. They are a measure of confidence in the private sector, they provide insight into ...
3
votes
1answer
43 views

Market Value of a publicly traded company

I want to know the market value (market capitalization) of a company on a particular day in the recent past (within the past 5 years). How can I do this, may be with the help of Google Finance or ...
3
votes
2answers
568 views

Saddle path equilibrium on financial market with rational expectations

In his 1978 paper introducing the Tobin tax Tobin states that : As a technical matter, we know that a rational expectations equilibrium on markets of this kind is a saddle point. That is, there ...
3
votes
1answer
111 views

Connection between negative interest rates and negative bond yields

In an answer to one of my other questions: Why does falling global bond yields signal coming deflation, the answerer states: Whereas central banks set rates by policy, long term bond yields are ...
3
votes
1answer
146 views

Conforming mortgage loan limits by county and year

US law restricts the Government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac to purchase only those residential mortgages smaller (by origination balance) than a limit, the "conforming loan ...
3
votes
3answers
248 views

Market Behavior under expected and unexpected news

I found the following text in the paper "Real-time Price Discovery in Foreign Exchange" The general pattern is one of very quick exchange rate conditional mean adjustment, characterized by a jump ...
3
votes
3answers
128 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?
3
votes
0answers
46 views

Why don't firms and individuals do much more risk management? Couldn't they all hedge all kinds of risks financially?

There are many risks in the economy that agents could hedge. For example, house prices can go up or down, healthcare costs canchange, gas prices constantly change in fact, food prices,etc. They all ...
3
votes
0answers
143 views

With OPEC driving the prices of oil down, can American producers simply store oil produced at higher cost to sell later? [closed]

I have been wondering. With OPEC driving down the price of oil in order to stifle the growth of the American oil industry, what can we do about it? More specifically, why don't these oil producers ...
2
votes
2answers
438 views

What is the need for a special purpose entity/vehicle in mortgage backed securities

What is the need to create a special purpose entity/vehicle (SPV) for mortgage backed securities? What potential risks are avoided due to the creation of SPV? It is my naive idea that the holder of ...
2
votes
2answers
10k 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 ...
2
votes
1answer
96 views

Securities Prices in Financial Markets

Hello in the moment I am working with the book "Introduction to the Economics and Mathematics of Financial Markets" by Jakˇsa Cvitani ́c and Fernando Zapatero, which can be accessed at the link. ...
2
votes
2answers
3k views

Explaining the net capital outflow - trade balance identity

In an open economy, the following equation always holds, it is an identity: $S-I=NX$ where $S-I$ represents net capital outflow and $NX$ represents trade balance (net exports). This equation tells ...
2
votes
1answer
166 views

Bond market vs stock market during crisis

Why does bond market not change as much as the stock market during financial crisis? On the picture we see the development of the two markets
2
votes
1answer
44 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
576 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 ...
2
votes
0answers
26 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 $\...
2
votes
1answer
114 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 ...
2
votes
0answers
29 views

Understanding Options Quotes

Below is a picture of today's Rough Rice Options Quote. I would like to understand how to interpret the information in the table below. Firstly, with regards to the future contract we see that it ...
2
votes
0answers
78 views

What topics are important to analyse a financial product? [closed]

When reading analysis papers of financial product, derivative or stock, tangible or not, I noticed that a lot of those papers seem to have similar structures. This got me to the question if there ...
2
votes
0answers
329 views

Probability of states of nature

I've been given the following question and would really appreciate any help on part a. I've looked over all of my resources for this course and we have always been given the probability of the ...
2
votes
4answers
6k views

What are the advantages and disadvantages of the IS LM model?

How does the IS-LM model help economists in the day to day analysis of the economy? There are just too many assumptions that are not there in the real world.
1
vote
2answers
470 views

Is trading in the commodity futures much more riskier than trading in stock market futures?

My understanding is that the price of a stock at the stock exchange is determined by supply demand mechanics during trading hours, and the price of futures is determined by the price of the underlying ...
1
vote
1answer
68 views

Fannie Mae and Freddie Mac as substitute benchmark bonds

"The reduction seen in US government debt in the late 1990s has led to a redution in the supply of intermediate and long-term government bonds, and some concern has arisen over this fact. In the ...
1
vote
2answers
1k 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?...
1
vote
1answer
67 views

Gold and loss of faith in central banking

In this article here, http://www.telegraph.co.uk/investing/gold/gold-resurgence-whos-buying-gold-and-why/ , it states that "gold tends to do....best when markets lose faith in central banking". I ...
1
vote
2answers
52 views

The notion of price

Typically in market clearing, the supply and demand (ask and bid) curves meet at a certain point, and the projection of these curves creates a quantity and price. Does this price have a deeper meaning ...
1
vote
1answer
72 views

Where is GBP/EUR exchange rate going? [closed]

Very recently, the GBP has been raising against the Euro. I understand this has to do with the EU injecting €1.1 trillion until Sep 2016 and the elections in Greece. My question is: when is this ...
1
vote
1answer
43 views

Paid in capital

If the par value of the common stock is 5 dollars and is sold at market for 10 dollars does the company get the extra $5? Also how is the company affected by the market value going up and down?
1
vote
1answer
3k 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 <...
1
vote
2answers
209 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 ...