(FINANCE) a person or entity that lends money to someone else by creating securities and selling them. In commercial milieux, this is investment banking, and the most famous investment bank is Goldman Sachs. Another major investment bank is Morgan Stanley.
Most major countries have a ministry of the treasury, or ministry of finance, that issues bonds for the government and is responsible for selling them to raise money for government borrowing. These are treasury securities.
Most major countries have a ministry of the treasury, or ministry of finance, that issues bonds for the government and is responsible for selling them to raise money for government borrowing. These are treasury securities.
by Abu Yahya May 05, 2010
Get the Underwriter mug.*noun*; generic term for economic thought developed from 1776 to 1930, which assumed the following basic concepts:
1. all types of goods, including factors of production, can be efficiently traded in markets;
2. given free markets, all goods available for purchase will, in fact, be purchased (including labor);
3. free markets include unlimited ability of prices of commodities to move upwards or downward to ensure the quantity supplied matches the quantity demanded.
*Subdivisions*
Adam Smith (1723-1790), auther of *The Wealth of Nations* (1776) is usually credited with compiling the critical ideas into a single theory.
Some historians regard the classical era as really beginning after 1817, with the work of David Ricardo (1772-1823) and Nassau Senior (1790-1864). Ricardo and David developed the concept of diminishing marginal utility to explain the idea of factor cost, and ultimately, market equilibrium.
After 1870, however, classical economics experienced the marginal revolution, in which the field adopted a much more systematic approach to addressing major research questions.
As a result of the Great Depression (1929-1939), classical economics generally faded from view until the late 1970's. At this time, the rational expectations hypothesis and real business cycle theory were refined in order to address problems that had crippled classical economics in the 1920's.
Textbooks addressing classical economic research since 1964 usually call it "New Classical economics." From 1982 to 2006, nearly all Nobel prizes in economics were awarded to New Classical economics such as
George Stigler, Ronald Coase, Robert Lucas Jr., Edward Prescott, and Edmund Phelps.
1. all types of goods, including factors of production, can be efficiently traded in markets;
2. given free markets, all goods available for purchase will, in fact, be purchased (including labor);
3. free markets include unlimited ability of prices of commodities to move upwards or downward to ensure the quantity supplied matches the quantity demanded.
*Subdivisions*
Adam Smith (1723-1790), auther of *The Wealth of Nations* (1776) is usually credited with compiling the critical ideas into a single theory.
Some historians regard the classical era as really beginning after 1817, with the work of David Ricardo (1772-1823) and Nassau Senior (1790-1864). Ricardo and David developed the concept of diminishing marginal utility to explain the idea of factor cost, and ultimately, market equilibrium.
After 1870, however, classical economics experienced the marginal revolution, in which the field adopted a much more systematic approach to addressing major research questions.
As a result of the Great Depression (1929-1939), classical economics generally faded from view until the late 1970's. At this time, the rational expectations hypothesis and real business cycle theory were refined in order to address problems that had crippled classical economics in the 1920's.
Textbooks addressing classical economic research since 1964 usually call it "New Classical economics." From 1982 to 2006, nearly all Nobel prizes in economics were awarded to New Classical economics such as
George Stigler, Ronald Coase, Robert Lucas Jr., Edward Prescott, and Edmund Phelps.
Proponents of classical economics are nearly always extremely conservative in their political views, and usually conclude that the sole legitimate role of the state is to defend property rights.
by Abu Yahya March 03, 2009
Get the classical economics mug.*noun*; prolonged economic crisis characterized by drastic (i.e., >20%) decline in output, reduction in employment, and deflation. Other technical conditions include a liquidity trap and "permanent" (i.e., persisting in many sectors for several quarters) failure to reach equilibrium.
Usually the word "depression" (when referring to economics) is used to refer to the Great Depression, although in fact there were eight incidents of a global depression between 1815 and 1922. These were
--- 1815-21
--- 1832-33
--- 1837-44
--- 1854-57
--- 1867-68
--- 1876-79
--- 1893-96
--- 1920-22
In addition, there have been many localized depressions, panics (e.g., the 1907 Panic {USA}, followed by the Mexican Depression of 1908), and recessions.
DIFFERENCE BETWEEN RECESSION & DEPRESSION
The technical distinction between a recession and depression can vary, although economists usually agree on which is which. In Keynesian economics, a depression is defined by the existence of a flat liquidity-money (LM) curve (which means that interest rates have no influence on people's determination to hold their wealth as cash); and/or a nearly vertical investment-savings (IS) curve (which means interest rates have no influence on the willingness of entrepreneurs to expand/continue operations).
In contrast, a recession is a much less drastic event. Interest rates still have influence on investment and liquidity, and there is no deflation. Conventional fiscal policy and monetary policy, combined and in moderate doses, can restore full employment.
Neoclassical economics/New Classical economics defines a recession as a shift in people's income/leisure preferences as the result of a technology shock. The technology shock sharply reduces the returns to labor, so workers are paid less and many withdraw their labor from the market. In a depression, the technology shocks are compounded and cause a permanent change in the production function; large numbers of enterprise are no longer viable.
More generally, a recession involves the downward phase of a routine business cycle; these typically occur every three-seven years. A depression represents a partial collapse of the industrial system, and a comprehensive collapse of the financial system.
Usually the word "depression" (when referring to economics) is used to refer to the Great Depression, although in fact there were eight incidents of a global depression between 1815 and 1922. These were
--- 1815-21
--- 1832-33
--- 1837-44
--- 1854-57
--- 1867-68
--- 1876-79
--- 1893-96
--- 1920-22
In addition, there have been many localized depressions, panics (e.g., the 1907 Panic {USA}, followed by the Mexican Depression of 1908), and recessions.
DIFFERENCE BETWEEN RECESSION & DEPRESSION
The technical distinction between a recession and depression can vary, although economists usually agree on which is which. In Keynesian economics, a depression is defined by the existence of a flat liquidity-money (LM) curve (which means that interest rates have no influence on people's determination to hold their wealth as cash); and/or a nearly vertical investment-savings (IS) curve (which means interest rates have no influence on the willingness of entrepreneurs to expand/continue operations).
In contrast, a recession is a much less drastic event. Interest rates still have influence on investment and liquidity, and there is no deflation. Conventional fiscal policy and monetary policy, combined and in moderate doses, can restore full employment.
Neoclassical economics/New Classical economics defines a recession as a shift in people's income/leisure preferences as the result of a technology shock. The technology shock sharply reduces the returns to labor, so workers are paid less and many withdraw their labor from the market. In a depression, the technology shocks are compounded and cause a permanent change in the production function; large numbers of enterprise are no longer viable.
More generally, a recession involves the downward phase of a routine business cycle; these typically occur every three-seven years. A depression represents a partial collapse of the industrial system, and a comprehensive collapse of the financial system.
From 1929 to 1933 the U.S. price level fell 25 percent. Many economists blame this deflation for the severity of the Great Depression. They argue that the deflation may have turned what in 1931 was a typical economic downturn into an unprecedented *sic* period of high unemployment and depressed income.
N. Gregory Mankiw, William M. Scarth, *Macroeconomics: Canadian Edition*, 2nd ed. (2003) p.318
N. Gregory Mankiw, William M. Scarth, *Macroeconomics: Canadian Edition*, 2nd ed. (2003) p.318
by Abu Yahya March 07, 2009
Get the depression mug.(FINANCE) a financial derivative whose underlying asset is a stock. The simplest kinds include the equity swap and the option.
As opposed to currency derivatives, interest rate derivatives, commodity derivatives, and so on. An equity swap typically involves an "equity side" of the transaction AND something else, like interest rates or oil prices.
Equity derivatives can be written on indices (e.g., the S&P 500, the FTSE-100, NASDAQ) as well as on stocks. In fact, they are often bought "out of the money" by mutual fund managers as insurance against a catastrophic decline in the fund value.
As opposed to currency derivatives, interest rate derivatives, commodity derivatives, and so on. An equity swap typically involves an "equity side" of the transaction AND something else, like interest rates or oil prices.
Equity derivatives can be written on indices (e.g., the S&P 500, the FTSE-100, NASDAQ) as well as on stocks. In fact, they are often bought "out of the money" by mutual fund managers as insurance against a catastrophic decline in the fund value.
One other reason that poison pills are back in favor is the growth of synthetic equity derivative swap transactions, where a “short party” agrees to pay a “long party” the cash flows from a particular amount of a target company’s stock. In exchange, the long party agrees to pay a fee and to cover any decrease in the market value of the stock ... Through such transactions, a long party can suddenly become a significant stockholder of a target company without warning.
--Dykema Gossett & Andrew H. Connor "The poison pill resurgence," Lexology (15 March 2010)
--Dykema Gossett & Andrew H. Connor "The poison pill resurgence," Lexology (15 March 2010)
by Abu Yahya April 15, 2010
Get the equity derivative mug.Capital investment in a foreign country that takes the form of purchases of securities (stocks, bonds, and commercial paper) in the companies of firms based in that country. Contrast to FDI.
by abu yahya September 28, 2008
Get the portfolio investment mug.(FINANCE) a situation in which an investor owns financial instruments (shares, bonds, financial derivatives, etc.) that will make the most money IF some other thing declines in value.
Therefore, one always has to take a short position on something in particular. A short position on gold means the investor expects gold to decline in value in the near future, and has bought various things to make money if it does.
Some ways to take a short position on X include:
(1) buying a put option on X
(2) writing a call option on X
(3) borrowing X and selling it (shorting a stock)
#3 is the classical way to take a short position. It was dangerous because a skillful trader could squeeze the shorts using a corner.
Therefore, one always has to take a short position on something in particular. A short position on gold means the investor expects gold to decline in value in the near future, and has bought various things to make money if it does.
Some ways to take a short position on X include:
(1) buying a put option on X
(2) writing a call option on X
(3) borrowing X and selling it (shorting a stock)
#3 is the classical way to take a short position. It was dangerous because a skillful trader could squeeze the shorts using a corner.
BILL: I guess you took a bath when the stock market tanked, huh?
ANA: Nope. I took a short position on all of the nine largest banks. Did rather well, thank you very much.
BIL: Sweet!
ANA: Nope. I took a short position on all of the nine largest banks. Did rather well, thank you very much.
BIL: Sweet!
by Abu Yahya April 05, 2010
Get the short position mug.(ECONOMICS) the annual increase in financial claims owed to the people of particular country, MINUS any increase of claims that same people owe abroad. The net annual increase in assets resulting from commerce with the rest of the world.
COMPONENTS
There are three components of current accounts:
(1) trade balance (surplus or deficit)
(2) foreign factor income (income minus outgo)
(3) net foreign aid
Usually the largest component of a current account surplus is the trade surplus, although in 1990 the USA actually had a quarterly current account surplus caused by massive "foreign aid" (actually, payments to defray the cost of waging the first Gulf War.
COMPONENTS
There are three components of current accounts:
(1) trade balance (surplus or deficit)
(2) foreign factor income (income minus outgo)
(3) net foreign aid
Usually the largest component of a current account surplus is the trade surplus, although in 1990 the USA actually had a quarterly current account surplus caused by massive "foreign aid" (actually, payments to defray the cost of waging the first Gulf War.
The South Korean won was lower late Tuesday as investor appetite for risk{y} assets was damped by broad-based losses in regional stock markets, led by a sharp fall in Chinese shares.
The local currency largely brushed off news that the country's current account surplus rose in May to a six-month high of $3.83 billion.
Traders said any positive impact from the current account data was offset by data showing the capital account balance... posted a net outflow of $11.96 billion in May, compared with a $8.56 billion inflow in April.
The local currency largely brushed off news that the country's current account surplus rose in May to a six-month high of $3.83 billion.
Traders said any positive impact from the current account data was offset by data showing the capital account balance... posted a net outflow of $11.96 billion in May, compared with a $8.56 billion inflow in April.
by Abu Yahya July 04, 2010
Get the current account surplus mug.