Why are CRAs (particularly, Moody’s Investors Service and Standard & Poor’s) so entrenched in financial markets? 3. What are the criticisms of CRAs and is it feasible for regulators to attempt to reduce the reliance of financial markets on CRAs? 4. The article refers to the various sovereign rating changes that have recently occurred.
In Australia’s economy, there are many domestic and global changes impacting aspects of our economy such as the exchange rate. The exchange rate is the price of an economies currency in relation to another currency. Australia’s currency is determined by the concept of market forces of supply and demand meaning changed in the domestic and global economy will impact the exchange rate dramatically. Domestic influences such as competitiveness of Australian industries and Reserve Bank of Australia intervention will assist in the determination of Australia’s exchange rate. Also international influences such as financial flows into Australia by foreign investors will directly adjust our exchange rates.
As the Reserve increases interest rates, it effectively lowers the demand for money. Increasing the interest rates would be in the Reserves best interest when the nation is experiencing rising inflation. This type of monetary policy is called contractionary monetary policy (Hubbart, 869). On the other hand, to increase demand for money the Reserve can decrease the interest rate. Decreasing the interest rate effectively increases consumer and businesses consumption.
C. What information about securities must companies disclose? Discuss how Merliss should report the proposed preferred stock issue. a. Dividend and liquidation preferences b. Participation rights c. Call prices and dates d. Conversion rates and dates e. Exercise prices and dates f. Sinking-fund requirements g. Unusual voting rights h. Contracts to issue additional shares i.
Since, the FED set the interest rate in which the banks borrow from, Edgars’ ability to borrow enough money or establish a line of credit to start his business will be affected by inflation, interest rate and financial policies. However, in some situations, an unanticipated inflation can benefit Edgar, as this type of situation whenever inflation rates are underestimated for the life of a loan, the bank loses and Edgar will
Monetary policies influence and are influenced by international developments, including exchange rates, and based on these market conditions the U.S. government can make strategic changes to these policies to maintain the country’s economic stability (full employment, stable growth and price stability). For example if Federal Reserve actions raised U.S. interest rates, the foreign exchange value of the dollar generally would rise. An increase in the foreign exchange value of the dollar, in turn, would raise the price in foreign currency of U.S. goods traded on world markets and lower the dollar price of goods imported into the United States (Federal Reserve, 2005). By restraining exports and boosting imports, these developments could lower output and price levels in the U.S. economy and control or lower
Consumer price and producer price in 2009 to 2012 continue to drop and raise the price for consumers was not steady. The direction and magnitude of price change in the Producer Price Index for finished goods anticipates a similar change in the Consumer Price Index for all items. When this assumed relationship is contradicted by the actual movements of the two series. The answer is that conceptual and definitional differences between the PPI and CPI—differences which are consistent with the uses of the two measures—contribute to the differences in their price movements. A primary use of the PPI is to deflate revenue streams in order to measure real growth in output.
It includes options and warrants as well as debt and stock. "(2) Participation rights – contractual rights of security holders to receive dividends or returns from the security issuer’s profits, cash flows, or returns on investments. " "(3) Preferred Stock – a security that has preferential rights compare to capital stock. " (C) What information about securities must companies disclose? Discuss how Hincapie should report the proposed preferred stock issue.
Option (A) provides a clearer picture on how the stock options affect the company’s equity through the balance sheet. Expense: An expense represents the actual or expected cash outflow that results from an entity’s ongoing major or central operations. Option (A) values the compensation based on the value of the stock options. Therefore, this transaction
The think that I learn from this project, when there is economical problem the prices of stock fluctuate whether it goes up or down. This assignment taught me how to better understand the stock market and what we should expect when it falls or goes up. And what could be the risk when investing such a lower market. I learn that various industry have different trend and the way to develop those trend. I learn that the company who mislead their consumer could run to a higher risk.