Financial Market Analysis and Economic Growth
Added on 2020-07-23
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InternationalFinancial Markets andInstitutions
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Q.1: What are yield curves? its theories and the yield curves for 10-year government bonds inthe UK, US and China. What if anything, does this tell us about the economic outlook of thefinancial markets?.......................................................................................................................1Q.2: Importance of International stock market for the proper functioning of an economy andthe approaches to value stocks using world examples and drawbacks of the methods..............5Q.3: Functioning of a central bank in the context if international financial markets andinstitutions. Role of central banks and its supports and promote price stability and economicgrowth in the economy................................................................................................................6CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
INTRODUCTIONInternational financial market is the place where all types of organisations, entities andenterprises, group of people as well as businesses get financial help to execute and promote theirtrade activities at global level. There are some certain rules and institutions made where tradeactivities take place regarding assets and surplus (Ehrmann, Fratzscher and Rigobon, 2011). It isseen that institutions and stock market are growing day by day. Policies, regulations and rules aremade around monetary and fiscal policies. All the guidelines and the policies remain directlyconnected with the government and the governance. This report defines the yield curve and thetheories which are associated with yield curves. Importance of international market in respect ofproviding global share market and approving stocks in international market also defined in thiscontext. Role of central banks in respect of emerging the economy and in maintaining stabilitysubject to stock prices.Q1. Yield curves, its theories and examining yield curves for 10-year government bonds in theUK, US and China along with analysing what if anything, does this tell us about theeconomic outlook of the financial marketsYield CurvesIt is a curve which indicates towards interest rates and set the point of bonds whichequal drives the credit quality but it bifurcate the maturity dates and the liabilities. There is afrequency time calculated with the yield curve which compares the three months, two year fiveyear and 30 years such as U.S. Treasury debts (Doh, 2011). This curve is basically considered asa benchmark for subsiding debts in the stock market. Line defines the mortgage rates, banklending rates and it is also used to anticipate variations in economic context subjected to outputand growth.In summarised way yield curve is a way to evaluate the amount of risk in respect of bondinvestors which may have a huge impact on the earnings received on investments. Breakdown Yield CurveThis is considered as an idea and assumption of future interest and the changing rates ofeconomic activities (Cavusgil and et. al., 2014). There are some shapes found in yield curvewhich indicates towards normal, inverted and flat position of earnings. As per the yield curve,earning remains constant and stable in long term stage and gives optimum returns and earningsin short term duration remains high as well as helps the organisation to run operations in a better1
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