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P. 1
Final FM Report

Final FM Report

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Published by unboat

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Categories:Business/Law, Finance
Published by: unboat on Aug 08, 2009
Copyright:Attribution Non-commercial

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11/12/2012

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Chapter 1
The
business cycle
is the periodic but irregular up-and-down movements ineconomic activity, measured by fluctuations inreal GDPand other macroeconomicvariables.What are economic indicators and why are they important?An economic indicator is simply any economic statistic, such as theunemployment rate, GDP, or the inflation rate, which indicate how well the economyis doing and how well the economy is going to do in the future.To understand economic indicators, we must understand the ways in whicheconomic indicators differ. There are three major attributes each economic indicator has:
1. Relation to the Business Cycle / Economy
 Economic Indicators can have one of three different relationships to theeconomy:
1.1 Procyclic
: A procyclic (or procyclical) economic indicator is one thatmoves in the same direction as the economy. So if the economy is doing well, thisnumber is usually increasing, whereas if we're in a recession this indicator isdecreasing. The Gross Domestic Product (GDP) is an example of a procycliceconomic indicator.
1.2 Countercyclic
: A countercyclic (or countercyclical) economic indicator isone that moves in the opposite direction as the economy. The unemployment rate getslarger as the economy gets worse so it is a countercyclic economic indicator.
1.3 Acyclic
: An acyclic economic indicator is one that has no relation to thehealth of the economy and is generally of little use. The number of home runs theMontreal Expos hit in a year generally has no relationship to the health of theeconomy, so we could say it is an acyclic economic indicator.
1
 
2.
 
Frequency of the Data
 In most countries GDP figures are released quarterly (every three months)while the unemployment rate is released monthly. Some economic indicators, such asthe Dow Jones Index, are available immediately and change every minute.
3. Timing
Economic Indicators can be leading, lagging, or coincident which indicates thetiming of their changes relative to how the economy as a whole changes.
3.1 Leading
: Leading economic indicators are indicators which change beforethe economy changes. Stock market returns are a leading indicator, as the stock market usually begins to decline before the economy declines and they improve before the economy begins to pull out of a recession. Leading economic indicators arethe most important type for investors as they help predict what the economy will belike in the future.
3.2 Lagged
: A lagged economic indicator is one that does not change directionuntil a few quarters after the economy does. The unemployment rate is a laggedeconomic indicator as unemployment tends to increase for 2 or 3 quarters after theeconomy starts to improve.
3.3 Coincident
: A coincident economic indicator is one that simply moves atthe same time the economy does. The Gross Domestic Product is a coincidentindicator.
Main indicators:1. T
HAI
B
AHT
E
XCHANGE
ATE
L
IVE
C
HART
(USDTHB)
Thai Baht Exchange Rate Live Chart (USDTHB), quotes, historical data,forecast and news. The exchange rate between two currencies specifies how much onecurrency is worth in terms of the other. The spot exchange rate refers to the currentexchange rate. The forward exchange rate refers to an exchange rate that is quoted andtraded today but for delivery and payment on a specific future date. The foreign
2
 
exchange market is one of the largest markets in the world with nearly 4 trillion USDworth of currency changing hands every day.
2. T
HAILAND
I
NTEREST
ATE
Thailand Interest Rate chart, historical data, forecast and news. In Thailand,interest rate decisions are taken by The Bank of Thailands Monetary PolicyCommittee. The main interest rate is the 1-day repurchase rate.The term interest raterefers to the yearly price charged by a lender to a borrower in order for the borrower to obtain a loan. This is usually expressed as a percentage of the total amount loaned.The relation between the interest rate and the time to maturity of the debt for a given borrower in a given currency is known as yield curve.
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