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dexazuxo's version from 2017-05-13 13:51


Question Answer
BALANCE SHEET: Warning signs manipulationRatios:
1. Current ratios less than 0.6 and falling below competitors
2. Asset turnover ratio low - Below competitors
What are the different types of money markets?Traditional money markets
-----The discount market
Parallel money markets
-----Interbank market-----gilt repo market-----the local authority market-----the eurocurrency market
KEY: Parallel money markets have grown that central banks find it harder to control liquidity. ALSO: overlap of traditional and money markets
If IR already 0, how can buying bills reduce further? If business confidence is low, how can central bank revive economic activity?QUANTITATIVE EASING! Large scale purchase of long term bonds to inject large liquidity into the system.
Difference between money and capital markets.Money markets: Trade short term instruments (bills) with less than 1 year maturity.
Capital markets: Trade longer term instruments (bonds) with over 1 year maturity. More focussed on capital raising than on market liquidity.
KEY: Operators switch between markets in response to needs