Assignment no 1

Submitted to Mam Farah waseem

Submitted by Sara saleem
Date 12-Oct- 2020
Major Accounting and Finance
Subject Money and Banking
Roll No F19BACT022
 Answer the Following questions:
(01)
What effect might a fall in stock/share prices have on business
investment?

The lower value for an administration stock show that the marketplace can create a
smaller measuring of cash; later, their present view and wheel-work will decrease.
The lower value for a company's cancel implies
that it can raise a small measure of assets, thus interest in plant will fall.also The
falling of stock price causing business interest in a worthy way. Business on a regular
basis contributes on capital conjecture when they feel that it will bring about rising
financial dealing respect. In the event that there is an increase in buyer spending, at
that point it on time an raise in stock prices
(02)
When interest rates decrease, how might businesses and consumers
change their economic behavior?
At the point when financing price/value decreasing, organizations and buyers will
figure their selling and purchasing conduct, one by one. Organizations will sell or
supply more since customer are great to purchase more. Organizations may similarly
grow their items' costs since customer will be able and ready to pay more for the
items and administrations. This is on the grounds that, with low loan costs, one-on-
one can get more and spend more. A decrease in finance price grow the measure of
cash available for use, henceforward expanding customer spending. It similarly grow
the sum supply in the market by organizations and the sum of money delivered by
makers. All the same, it continue with decrease in loan costs may on time inflationary
issues.
Interest Rate:
Finance cost can be defined as a measurement of cash that people component or the
state are charged on declared early, usually communicated in rate structure. Finance
cost are solved and set by the Government Bank Hold. These rates are important to
direct the measure of getting in a nation.
(03)

Some economists suspect that one of the reasons that economies in

developing countries grow so slowly is that they do not have well-
developed financial markets. Does this argument make sense?

The medium of exchange market is basically just numbers and cash. Both are
direct. . The important issue I see is basically human replete. People normally argue
change concept a Walmart and HSBC bank in a country zone that has a stable
agricultural/exchange economy and local people won't just dump what they have. It
will take some time for local people to encounter the change and see that it's an
improvement. Some will never like it, however their kids will. Similarly, you have to
recall that even 10% development is little when the economy is little. A lot of people
are great deal of energy in different African nations and keeping in mind that we can
see worthy development each rare get together, local people would state it was
"taking until the end of time".
 (04)
How can changes in foreign exchange rates affect the profitability of
financial institutions?

Changes in foreign trade rates change the calculation of benefit held by medium of
exchange set up and later lead to increases and chance on these profit. Similarly
changes in foreign trade rates causing the profit made by brokers in foreign trade who
work for medium of exchange recovered. Changes in foreign trade rates change the
idea of advantages held by fund earnings and later lead to increase and chance on
these benefits. Since the Central bank causing loan fees, expansion, and business
cycles, all of which significantly change the productivity of fund organizations.

(05)
Describe briefly the money as a store of value.

Money acts as a store of value. It means people can store their property in the form of
money. Money is the most liquid form of wealth and it can be stored without loss in
value. Money enables people to save a part of their current income and store it for
future use.
To act as a store of value, money must be dependably saved, stored, and get. It must
be predictably useful as a medium of exchange when it is get. In addition, the value
of money must change stable over time. Medium of exchange economics is the
branch of economics which take apart the functions of money. Storage of value is one
of the three mostly acceptable functions of money. The other functions are the
medium of exchange, which is used as an intermediary to avoid the suitableness of
the accident of wants, and the unit of account, which allows the value of various
goods, services, assets and liabilities to be supply in multiples of the same unit.
Money is well suited to storing value because of its purchasing power. It is also
useful because of its durability .Because of its function as a store of value, large
quantities of money are hoarded. Money's usefulness as a store of value declines if
there are significant changes in the general level of prices. So if inflation rises,
purchasing power declines and a cost is placed on those holding money
 References

Introducing Money | Boundless Economics - Lumen Learning

courses.lumenlearning.com › chapter › introducing-money

@study.com

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