Search results

Understanding the Foreign Exchange Interbank Market A foreign exchange rate is the price or rate showing how much it cost to buy one currency in exchange for another currency. Forex traders buy and sell currencies in the hopes that the exchange rate will move in their favor. For example, a...

What Is Forex? An exchange rate is a price paid for one currency in exchange for another. It is this type of exchange that drives the forex market. There are 180 different kinds of official currencies in the world. However, most international forex trades and payments are made using the U.S...

The Case for Investing in the Chinese Yuan From 2015 to 2020, the devaluation of the yuan by the Chinese government has accelerated from approximately 6.20 yuan-to-the U.S. dollar (USD) in 2015 to more than 7.10 in 2020. Rising Economy As the Chinese economy continues to expand, rapidly moving...

Understanding Money Supply Money supply, or money stock, is the total amount of money in circulation or in existence in a country at a given time. Money supply impacts price levels, capital availability, inflation, and the overall business and economic cycle of a country. A high velocity of...

All of these options have the same purpose—to expand the supply of currency or money supply for the country. KEY TAKEAWAYS A central bank, such as the Federal Reserve in the U.S., will use expansionary monetary to strengthen an economy. The three key actions by the Fed to expand the economy...

Manipulating Interest Rates The first tool used by the Fed, as well as central banks around the world, is the manipulation of short-term interest rates. Put simply, this practice involves raising/lowering interest rates to slow/spur economic activity and control inflation. The mechanics are...

Understanding the Funds Rate Perhaps less clear is whether a change to this interest rate, known as the federal funds rate, impacts you on a personal level. If you have a credit card, an adjustable-rate mortgage or a private student loan, it probably does. Many variable-rate financial products...

Determining the Money Supply The Federal Open Market Committee (FOMC) and associated economic advisers meet regularly to assess the U.S. money supply and general economic condition. If it is determined that new money needs to be created, then the Fed targets a certain level of money injection...

The Role of the Federal Open Market Committee The Federal Open Market Committee (FOMC) sets monetary policy in the United States, with a dual mandate of achieving full employment and controlling inflation. The committee meets eight times a year to set policy, essentially determining whether to...

Deflation, in the form of falling prices, is not, in general, a harmful process for the economy or a problem for most businesses and consumers by itself. It is, however, widely feared by central banks and the broader financial sector, especially when it involves debt deflation because it...

There are a vast number of agencies assigned to regulate and oversee financial institutions and financial markets, including the Federal Reserve Board (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Securities and Exchange Commission (SEC). Each agency has specific...

What Is Fannie Mae? In the early 20th century, homeownership was out of reach for many people in the United States. Unless you could pay cash for an entire home (which few people could), you were looking at a prohibitively large down payment and a short-term loan that would culminate in a big...

Determining the Money Supply The Federal Open Market Committee (FOMC) and associated economic advisers meet regularly to assess the U.S. money supply and general economic condition. If it is determined that new money needs to be created, then the Fed targets a certain level of money injection...

Supply and Demand Market interest rates are determined by the supply and demand for loanable funds. Businesses demand credit to finance new investments and ongoing operations. Consumers also demand credit for new purchases and to finance their expenses against their income on a revolving basis...

On top of the fiscal stimulus impasse in Washington, coordination between the White House and Federal Reserve is also breaking down during one of the most critical times in American history. Yesterday U.S. Treasury Secretary Steven Mnuchin wrote a letter to Fed Chair Jerome Powell asking the...

Fast Fact Business school rankings remain fairly consistent over the years with the same schools appearing at the top year after year. The other schools ranked in the top five this year were the Massachusetts Institute of Technology’s Sloan School of Management in second, the University of...

Strong Cash, Low Earnings Expectations When vetting dividend-paying companies, long-term profitability is a key consideration. Although any company can occasionally experience a profitable quarter, only those that have demonstrated consistent growth on an annual basis should make the cut...

Factor Investing Factor investing requires investors to take into account an increased level of granularity when choosing securities—specifically, more granular than asset class. Common factors reviewed in factor investing include style, size and risk. Here are some examples of ETFs using five...

What Is an ETF? Think of an ETF as a mutual fund that trades like a stock. Just like a mutual fund, an ETF represents a basket of securities (such as stocks) that reflect an index such as the S&P 500 or the Barclays Capital U.S. Aggregate Bond Index. An ETF, however, isn't a mutual fund; it...

What Is a Mid-Cap? There is no single definition of a mid-cap stock. However, Standard & Poor's (S&P) defines mid-cap as a market capitalization of $300 million to $4 billion, where a large-cap has a market capitalization of over $4 billion and small-caps have market caps under $300 million...