Stock market is a big and popular market all over the world as it indicates the overall performance of all companies to develop the economy. Stock market become a crucial institution in an economy which greatly determines and indicates the performance of an economy that will reflects the performance of country. In essence, a supply and demand will determined the price of a stock (Al-Shubiri, 2010). The number of shares that firm issues is known as the supply of stock, while the demand is based on people who want to buy shares from shareholders who already own them.
A stock market plays a major role of enhancing the efficiency of capital formation and allocation in term of economic institution. Thus, a function of how well the stock market
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Efficient capital market can enhance the growth and wealth of the economy by maintaining the financial sector and with provision of a good channel for investment which play a very important role to engage domestic and foreign investors. The changes in its index of stock market performance can be measured by different factors including macroeconomic social and political …show more content…
In fact, other businesses were also indirectly affected including the consumers where they were of the notion that the increase in the price of the retail petroleum products could cause a general increase in the price of goods and services in the market.
The impact of inflation on stock market returns is becomes an important issue for a many years. Inflation is most important macroeconomic variable that have negative impact on economic activities. Higher inflation lead the interest rate be higher and it cause the rate of returns on stock will be raised. To get the knowledge about the impact of inflation is very important for an investor if it became out of control then plans may destroyed.
Exchange rate and stock returns also have a relationship. Foreign depositor changes their profits on stocks into their own cash. Foreign depositor get exaggerated when local cash gets stronger and changed into weaker cash. Exchange rate show negative relation with stock returns. Stock returns reduce when exchange rate enhances and reduces in exchange rate show positive impact on stock market
P1: Describe customers in four different contexts: A Market: A market is a place where demand and supply operate. Buyers and sellers interact to trade their good and services. (What is a market? , n.d.)
The capital business sector is the business sector for securities, where organizations and the legislature can raise long haul stores. The capital business sector incorporates the stock exchange what 's more, the security market. Money related controllers, for example, the U.S. Securities and Exchange Commission, direct the capital markets in their individual nations to guarantee that financial specialists are ensured against extortion. The capital markets comprise of the essential business sector, where new issues are appropriate to financial specialists, and the optional business sector, where existing securities are exchanged. (n.d.).
the people in the 1920’s came to find out just how bad the stock market could impact the lives of all Americans and the lives their children would have towards the future. One of the first causes, if not the
Unrestrained speculation and margin buying were the two big things in the Stock Market. Speculators bought stocks with money they borrowed. They would used those stocks as collateral to buy more stock. So if that person could not repay the loan, they would forfeit their stocks. Margin buying was a way of attracting the less wealthy to buy stocks.
Inflation can be linked to several different reasons. Some main reasons for the cause of inflation are consumer confidence, decease in supplies, and corporate deciding to charge more. (Investopedia) Consumer confidence is when consumers gain more confidence in spending due to a low unemployment rate and wages being stable. As the consumers continue to be more confident in spending this will cause for a high demand of product and services. As the manufacturers and the companies that are providing services see that the demands are going up, eventually they will drive up the prices for the products and services.
Outline the similarities and differences between the Single Index Model (SIM) and the Capital Asset Pricing Model (CAPM). Justify which of the two models makes a better assessment of return of a security (25 marks). To reduce a firm’s specific risk or residual risk a portfolio should have negative covariance or rather it should have no variance at all, for large portfolios however calculating variance requires greater and sophisticated computing power. As such, Index models greatly decrease the computations needed to calculate the optimum portfolio. The use of such Index models also eliminates illogical or rather absurd results.
POLITICAL - Sainsbury’s performance will be greatly affected by the political factors of United Kingdom. As the government and consumer debts being very high presently there, as a result it impacts greatly on attitudes of customers due to which business conditions experience very high pressure. It has not only to operate in these market conditions but also has to continually develop its business. In general, it can also have negative impact because of ongoing price fixing investigation among the big four UK retailers as Sainsbury is one of these and being at the forefront of this assertion. Allegation can hamper its image among public in market as public feel that they are cheated.
Efficiency of financial markets is one of the fundamental issues in finance. The central idea of market efficiency is that market prices of securities represent true value of securities. All relevant information is immediately reflected in the prices causing abnormal profit making impossible in the market. The efficient market hypothesis further implies that prices will move randomly that makes prediction of prices extremely difficult. Efficient market hypothesis requires that investors will be rational and have homogenous expectation.
Inflation is the rate at which the general level of prices for goods and services is rising, and, then purchasing power falling over a period of time. When price level rises, dollar buys fewer goods and services. Therefore, inflation results in loss of value of money.
For example, the sales of Apple products in US will decrease if there is a rise in the US. Because of this the purchasing power will also decrease. Hence the sales will be reduced. Hence, to reduce the rise effect, Apple has purchased itself foreign currency.
Outline the similarities and differences between the Single Index Model (SIM) and the Capital Asset Pricing Model (CAPM). Justify which of the two models makes a better assessment of return of a security (25 marks). To reduce a firm’s specific risk or residual risk a portfolio should have negative covariance or rather it should have no variance at all, for large portfolios however calculating variance requires greater and sophisticated computing power. As such, Index models greatly decrease the computations needed to calculate the optimum portfolio. The use of such Index models also eliminates illogical or rather absurd results.
CHAPTER 2 LITERATURE REVIEW INFLATION (InvestorWords, 2015) stated that inflation is the increase in the general price level of goods and services in economy, normally caused by excess supply of money. Inflation usually measured by the Consumer Price Index (CPI). When the cost of producing goods and services goes up, the purchasing power of dollar will decrease. A customer will not be able to purchase the same goods and services as he/she previously could.
ECONOMICS ASSIGNMENT CLASSIFICATION OF MARKETS AND ITS PRACTICAL IMPORTANCE SUBMITTED BY, REVIN FRANCIS NO-b1488 MBA-A MARKET STRUCTURE Market structure is defined by economists as the characteristics of the market. It can be organizational characteristics or competitive characteristics or any other features that can best describe a goods and services market. The major characteristics that economist have focused on in describing the market structures are the nature of competition and the mode of pricing in that market. Market structures can also be described as the number of firms in the market that produce identical goods and services. The market structure has great influence on the behaviour of individuals firms in the market.
ROLE OF MONEY IN MACROECONOMICS 1. Introduction Money can be seen as the medium of exchange which is acceptable while transaction is being undertaken between two parties. Some of the common forms of money are: - Commodity money: This is when the value of the good represents its value in terms of money like gold or silver. - Fiat money: This is when the value of the good is less than the value it represents - Bank money: It is the accounting credits that can be used by the depositor Money serves a variety of crucial functions in the economy and this is why it has gained an unparalleled influence in the matters of economy at micro as well as macro levels. Some of the features of money that make it so important for any economy are as follows:
1.0 INTRODUCTION In an economy, there exists different market structures to accommodate different industries and firms. This study will be made to understand in further depth the market power of different market structures, and in particular an example of using case studies of agricultural sector of the French markets to explain how an ideal perfectly competitive market works. This will then be further strengthened with several references linked to the case study. 1.1 Monopoly market