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International Trade Finance and Investment Assignment

   

Added on  2021-05-07

11 Pages3537 Words58 Views
InternationalTradeFinance andInvestmentREPORT

CONTENT PAGE 1.Executive Summary..............................................................................................................................32.Background of Financial Markets.......................................................................................................43.Capital Allocation within Domestic Economy............................................................................... 5-64.Capital Allocation within International Markets...........................................................................6-85.Evaluation of an Economy of your choice..........................................................................................86.Critical Evaluation of Challenges that the country faces due to Industrialisation and Trade Policies................................................................................................................................................8-97.Conclusion............................................................................................................................................108.Recommendations..............................................................................................................................109.References......................................................................................................................................10-11

Executive summary In this report I will be identifying, evaluate, analysing and reviewing information on the Canadian economy this is to provide prospective clients on the international trade, finance and investment. The reports will be based on the background of financial markets and why It is necessary as well as the capital market, Capital Allocation within Domestic Economy, Capital Allocation within International Markets, Evaluation of an Economy of your choice and Critical Evaluation of Challenges that the country faces due to Industrialisation and Trade Policies.

Background of Financial MarketFinancial market is a place for the exchange of assets (Henning, Pigott, Scott, 1975, p. 2). Financial markets play a vital role in allocating funds to economic activities it relates to a broad area to achieve the highest rate of return for businesses and entrepreneurs. (Financial market,2009) Financial markets refer to any marketplace where the trading of securities occurs, including the stock market, bond market, forex market, and derivatives market. Financial markets create securitiesproducts that provide a return for those who have excess funds and make these funds available to those who need additional money. (Kenton.W,2020) Financial market can be summarised as currency issue and return; deposit absorb, withdraw, loan disburse, foreign exchange trading, securities issue, transfer, insurance, trusts, domestic and international monetary settlement. (John, G. & Edward, S. 1960) Financial markets can be divided in money market and capital market. Money markets are short-term trading debt securities and capital markets are medium or long-term trading securities.Financial intermediaries are the units of economy that absorb money from economic agents with a surplus fund and transfer it to economic agents with a deficit and provide various kinds of financial services. The main functions of financial intermediaries are credit creation, settlement of payment, the distribution of resources, information provided and risk management. It has been divided into two parts (John Gurley and Edward Shaw, 1960) There are four main financial intermediaries; Deposit institutions can take deposits from units in economic agents with a surplus fund and lend the money gathered to economic agents in deficit. Insurance companies are non-deposit institutions which can gathering funds from insurance applicant and invest them in the capital markets. Unit trusts are non-deposit financial institutions they invest in the equity and bond markets using the money raised from the public. Pension funds is an asset pool that employees put their money for retirement. Funds are gathered by employers and handed over to pension funds. Financial markets and financial intermediaries can facilitate the transfer of funds from surplus to deficit units. Borrowers and lenders have a need for financial markets because of its two functions, pricing function and discipline function. (Hans Wijkander, 1992) thought that the main reason why financial intermediaries exist is a result of asymmetric information and expensive information products.It is mainly through the financial markets that the Canadian Bank's key policy rateinfluences interestrates and the exchange rate. This helps the Bank achieve itsmonetary policy objectives. The Bank is also involved in financial markets through auctions of government securities. On rare occasions, the Bank may alsointervene in the foreign exchange market on behalf of the government to promote orderly markets for the Canadian dollar. The Bank conducts wide-rangingresearch to strengthen its understanding of the structure of the Canadian financial system and to identify how the Bank can encourage the development and stability of Canadian markets. The Canadianmoney market hassubstantially broadened in 1954 with the introduction of day-to-day bank loans against Government of Canada treasury bills and other short-term government and government-guaranteed securities. Government of Canada bonds and Government of Canada guaranteed bonds are issued at less regular intervals. Money Market investments are ways for governments and corporations to raise capital. These short-term investments have a fixed rate of return held to maturity. Money market investments are sold at a "discount" to the “par" (maturity) value. The difference between the discounted price and the par value amount is the interest received on the investment. RBC Capital Markets is innovative, trusted partner with an in-depth expertise in capital markets, banking, and finance. RBC Capital Markets is part of a leading provider of financial services, Royal Bank of Canada (RBC) has been Operating since 1869.

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