11
votes
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Are stock exchanges market makers?
No, they are not market makers.
A market maker is someone who (i) quotes two prices (one 'low' and one 'high'), (ii) will buy from any seller at the low quoted price (even if there is no ...
- 16.9k
8
votes
Accepted
Are cryptocurrencies a ponzi scheme or a bubble?
In general, "Ponzi schemes" in the context of asset pricing refer to "rational bubbles", or a failure of the transversality condition you need when passing from a flow identity to a present value ...
- 691
6
votes
Accepted
Who were the economists who made lots of money in the financial markets?
At university classes, I always learned that the only economist who ever became rich was Ricardo. However, Ricardo was already rich before becoming an economist.
This article seems support this ...
- 419
6
votes
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Financial Economics Textbooks
The recommended books are decent. From these two I'd go with Bailey first and if you're comfortable with that, then LeRoy & Werner. The latter requires some background in linear algebra and ...
- 1,228
5
votes
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Why does falling global bond yields signal coming deflation?
Bond yields falling from their current near-zero position will place them in negative yield territory. Negative bond yields are deflationary by definition.
Paragraph 3, sentence 5 of the article says:
...
- 1,101
5
votes
Why is the Chilean economy so much better than the rest of the countries in South America?
This is honestly a pretty complicated question - it's very difficult to pinpoint any exact factors that have led to Chile being so successful relative to its Latin American counterparts. I'm not ...
- 431
5
votes
Why is gold a safe haven investment?
You could see it as a coordination game and an example of a rational bubble. Because everybody knows that people start buying gold and the price goes up when the economy tanks, it is actually a good ...
- 970
5
votes
What is the need for a special purpose entity/vehicle in mortgage backed securities
Here are a few reasons that build on @Dismalscience's answer.
Capital requirements: Banks don't typically need to hold capital
against loans they originated but subsequently moved into an SPV. This ...
- 16.3k
5
votes
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Competitive vs complete and non-competitive vs incomplete marekts
Complete market is a market where every possible asset or good can be assigned a price and where you have perfect information, can make perfect contracts and zero transaction costs. Any market can be ...
- 54.4k
5
votes
Accepted
How does the GDP multiplier work?
The multiplier comes from the solution to the goods market equilibrium. In economics everything is endogenous. Increase in income increases consumption that increases demand, demand increases ...
- 54.4k
4
votes
What is the need for a special purpose entity/vehicle in mortgage backed securities
SPVs are typically used in MBS issuance to get the loans off the issuing bank's balance sheet, freeing up that balance sheet space to make more loans and providing bankruptcy-remoteness (i.e., the SPV ...
- 6,374
4
votes
Who were the economists who made lots of money in the financial markets?
I will post the obligatory Efficient Market Hypothesis answer. This does not directly answer the question, but addresses the aparent misconception that there is some secret economist knowledge that ...
- 16.9k
4
votes
Accepted
Free Data Source for Credit Spreads?
Yes, there's daily data available on the St. Louis Fed's FRED.
- 6,374
4
votes
Accepted
Difference between double auction and continuous double auction?
So, if a distinction is made, as continuous double auctions are usually just called double auctions, then the difference has to do with frequency. It is easier to have an example.
The New York Stock ...
- 2,006
4
votes
Accepted
Volatility and the stock market
There seems to me no relationship between the general direction of
price movements and market volatility.
Clearly the market disagrees with you. As the saying goes, "markets go up in an escalator ...
- 2,619
3
votes
Financial Smart Contract on Ethereum: can an Ether Futures contract be priced in Ether?
Futures and Options are all about exchanging something for something else. These kind of derivatives all involve exchanging different 'kinds' of goods so it doesn't make sense to have both sides ...
- 502
3
votes
Financial Economics Textbooks
ASSET PRICING THEORY:
Cochrane, Asset Pricing is a good book in that it displays the way that hard-core asset pricers see the world.
Huang and Litzenberger, Foundations for Financial Economics is ...
- 2,648
3
votes
Why is gold a safe haven investment?
Gold is safe-haven investment for mainly two reasons:
It is a scarce resource.
This alone would not explain why other scarce resources aren't good stores of values. The second reason is:
It has the ...
- 131
3
votes
Who were the economists who made lots of money in the financial markets?
Myron Scholes and Robert C. Merton were 2 economists who co-founded Long-Term Capital Management fund. They made a lot of money initially both for themselves and investors by using trading strategies ...
- 141
3
votes
Accepted
Fannie Mae and Freddie Mac as substitute benchmark bonds
Fannie Mae and Freddie Mac bonds have long been viewed as having an implicit government guarantee, and though they received government support during the crisis, they never missed a payment to ...
- 6,374
3
votes
Accepted
Securities Prices in Financial Markets
The total wealth (as is pointed out in the book) is given as :
$$
X(1)=\delta_{0}B(1)+\delta_{1}S_{1}(1)+...\delta_{N}S_{N}(1)
$$
The wealth at period one is just the sum of the securities (including ...
- 1,631
3
votes
Accepted
Connection between negative interest rates and negative bond yields
I cannot see the mechanism as to why if central banks set rates in positive territory when long term bonds yields are negative how this will cause the yield curve to invert.
No need to seek a ...
- 1,101
3
votes
Free source of large amounts of financial data
I assume that you are looking for macro financial data across countries. So, you can check out:
World Bank Open Data with a specific query on Financial Sector
IMF Financial Statistics or IMF Finances....
- 6,885
3
votes
Difference between Unit and Share?
A share or stock is part of an individual company. Unit (Trusts) are a collection of different (and usually related) shares.
For example, I am currently investing in a Singapore Equity Fund. And this ...
- 754
3
votes
Accepted
What is the difference between USD/EUR and EUR/USD when talking about Forex
When the forex market does a quote, it is done in currency pairs. When you sell a currency, you have to be buying something in return. That is why they are quoted in pairs.
For example when you buy ...
- 123
3
votes
Beginner wanting to learn about economics/finance to explore career options?
A great starting point is "Fundamentals of Corporate Finance", Ross, Westerfield & Jordan.
This book will give you a good overview of key concepts in finance. This book is widely used in ...
- 4,188
3
votes
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What does the Fed mean by "smoothening money market functioning"?
Money markets are where financial institutions and corporates access short-term funding.
One money market where the Fed has intervened directly is the overnight repo market where overnight loans ("...
- 2,619
3
votes
Accepted
Literature on DSGE models featuring a financial sector
This is actually one of the more exciting development in DSGE modelling since financial crisis. Including financial sector or friction is definitely a growing area of research and interest.
...
- 54.4k
3
votes
Accepted
Where does investment originate from in the circular flow model?
Investment ultimately comes from households through savings. From a macroeconomic perspective savings is equal to to investment ($S=I$).
Investment comes from income because saving is portion of ...
- 54.4k
3
votes
What is the correct way of calculating the "average" price based on the "Open,High,Low,Close" daily trade fields?
You cannot obtain that information with the data provided.
You would need periodic samples throughout the day.
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