Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Q. What do you mean by Hedge Fund?
In the easiest strategy a hedge fund borrows Hong Kong dollars (HKD) and then sells them in the market against USD that is they short the HKD. Note that this will results the money supply to shrink. A reduce in money supply leads to an interest rates increase. Raise in interest rates have several effects on the stock market. First borrowing HKD to purchase stocks becomes more expensive.
Therefore fewer investors would use margin. Second a raise in deposit interest rates will draw funds from stocks to deposits. Third interest rate raise are negative for businesses and their value will go down. Yet again stocks decline.
Alternatively higher interest rates lure more investors to park their money in Hong Kong boosting the currency. But they as well slam the stock market because rising rates hurt company's ability to borrow and expand.
However several of these Hedge Funds involved in the speculation didn't operate in the cash market. In its place they shorted the HKD in the futures markets. This doesn't require borrowing HKD. It is the counterparty who has to hedge the long HKD position that requires to borrow HKD from the banking system.
In the particular situation discussed here Hedge Fund managers believed that they were taking little risk
• The hedge funds stake on the collapse of the peg. If the dowel breaks the HKD is expected to fall. Specified the psychology of those days the casual view was that the HKD was overvalued. The merely risk to Hedge Funds is that the peg holds.
Under these conditions their loss will be the dissimilarity between the initial cost of entering the trade to sell HKD in futures markets and the pegged rate. The reading proposed that this cost is low.
How does the theory of comparative advantage relate to the currency swap market? Answer: Name recognition is very important in the international bond market. With no it, even a
Discuss the risk associated with Foreign Direct Investment. How do these risks differ from those encountered in domestic investment.
Q. What do you mean by Sarbanes-Oxley? Sarbanes-Oxley (SOX) - Sarbanes-Oxley Act was signed into law on 30 July 2002 by President Bush. Act is designed to oversee the financial
Table 1: Politics Stability of the existing government structure National/provincial government r
How would you describe the fact that China emerged as the second most significant recipient of FDI after the United States in recent years? Answer: China attracted a large deal o
Q. What is Maturity? Maturity: The maturity period of the securities should be short, otherwise, the company might suffer losses on account of getting the funds pre-maturely re
External Financing with Same Cost of Capital and Same Proportions as Existing: If a firm raises new capital funds in the same proportion as at present and at the same specific cos
As of November 1, 1999, the exchange rate in between the Brazilian real and U.S. dollar is R$1.95/$. The agreement forecast for the U.S. and Brazil inflation rates for the next 1-y
Q. Report on the valuation of Endess? Ideally the valuation must be based upon the present value of incremental cash flows that result from the buy-in but in practice this data
What are the types of major types of finance companies? There are three main types of finance companies: a. Sales finance institutions which make loans to customers of a cer
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd