INTERNATIONAL FINANCIAL MARKETS AND INSTITUTIONS Coursework Essay

INTERNATIONAL FINANCIAL MARKETS AND INSTITUTIONS Coursework - Essay Example Cases in point are explored through some major financial institutions to show the financial statements unreliability to measure asset values. The role of financial intermediaries and imperfect information are then delved into, as to how they propelled the crisis. In order to provide a conclusive view of the global financial crisis, the paper ends with a discussion about how asset securitisation has ended up in speculations, market manias, and eventually a financial crash in the global financial system. With all these, certain regulations are proposed The invisible hand view of the economy, as explored in the book â€Å"Economics† by Samuelson and Nordhaus, will fail to exist under two conditions: when there is imperfect competition and imperfect information, and when there are market externalities. The failure in major financial markets exists because of either of these conditions. Prior to the financial crisis, the financial markets such as stocks, bonds and mutual funds markets are considered markets where the invisible hand operates. The stock market has always been referred to as an efficient market by economists. According to Brealey, Myers and Marcus, â€Å"the competition [in this market] to find misvalued stocks is intense. So when new information comes out, investors rush to take advantage of it and thereby eliminate any profit opportunities (2004, 165).† An efficient market, according to Samuelson and Nordhaus in their book â€Å"Economics† is defined as â€Å"one where all new information is quickly understood by market participants and becomes immediately incorporated into the market prices (2004, 534).† This characteristic of the stock market as an efficient market is attributed to the availability of timely information which is incorporated in the prices of the stocks. The stock market indeed needs investors who believe

For-profit organization Research Paper Example | Topics and Well Written Essays - 500 words

For-profit organization - Research Paper Example It is illustrative to examine the difficulties behind adopting this particular accounting procedure. The Volvo Group has a number of divisions: Volvo Trucks, Volvo Buses, Volvo Construction, Volvo Penta, Volvo Aero and Volvo Financial Services. Volvo is primarily a vehicle and automobile manufacturer, but its finance website offers leases and finance solutions, meaning that accounting is doubly important for the firm (Volvo AB, 2011). Volvo had an excellent year across all departments: â€Å"During the fourth quarter of 2010, the Volvo Group continued to grow at a good pace with higher sales in all regions, improved profitability and a very strong cash flow. Year-on-year sales were up 23% to SEK 73.4 billion. Operating income improved to SEK 5.5 billion and the operating cash flow from Industrial operations amounted to SEK 15.1 billion. As a result of improved profitability and strong cash flow, net debt in the Industrial operations is now down to 37% of shareholders’ equity, which is in accordance with our objective†.