The following article will highlight the five main changes in international capital market. The changes are: 1. Liquidity 2. Securitisation 3. Separation of Risk 4. Reduced Transparency 5. Changing Roles of Intermediaries. Change # 1. Liquidity: Changes in communication, computerisation and the increasing sophistication of modern finance allow large amounts of capital to be mobilised very rapidly. The ease with [...]
In this article we will discuss about capital market and its functions. In a very basic sense, a market matches the needs of sellers to those of buyers and establishes the price at which trades occur. In a capital market, lenders have preferences as to: (1) The maturity of the loans they make, (2) The ease and security of liquidating [...]
The modern theory regarding exchange rate determination is known as the supply-demand theory. Suppose there are only two countries, the USA and UK and two currencies, the dollar and the pound. How is the rate at which dollar is exchanged for pound (i.e., dollar price of pound) determined? Under this system the exchange rate fluctuates from day to day according [...]