The Large Movements of Volatility Spreading by the European Monetary union - Free Essay Example

Sample details Pages: 5 Words: 1394 Downloads: 5 Date added: 2017/06/26 Category Finance Essay Type Analytical essay Did you like this example? Over the last months, European Monetary Union (EMU) countries have experienced large movements in their spreads with an unrecorded degree of volatility. Academic research consensuses agree these movements havent been the result of the same causes over time; for instance, at the beginning of the crisis investors required higher premiums, making the market price of risk increase. There were a preference for few riskier assets, making sovereign securities the favorites at the expense of corporate bonds and other riskier assets; therefore, it creates a new vision and a higher degree of differentiation among financial assets. Don’t waste time! Our writers will create an original "The Large Movements of Volatility Spreading by the European Monetary union" essay for you Create order According to Elizalde Gallo (2008), during the second half of 2007, spreads levels increased because of market turbulence, instead of the risk to default. Credit markets experienced a flight-from-quality phenomenon which increased the perceived credit risk of the safest credit instruments. Moreover, Bernoth, Von Hagen and Schuknecht (2004) conclude that in time of uncertainty, investors move to safer and more liquid assets because of risk aversion. The crisis has increased sovereign risk causing greater budget deficits and stopping the potential growth of the country. At the beginning of the crisis the countries which suffer most because of it were the only one which increased their sovereign credit risk premiums, later on, spreads started to increase in countries highly indebted but with weak fundamentals. Crises increase the pressure on countrys indebtedness and at the same time they make more difficult to sovereign to fulfil debt commitments because of the decreasing path in s overeign economic growth they create. Moreover, because of the existence cross-border spillovers, the transmission of sovereign risk threatens the global financial stability. This paper is based on the methodology developed by Caceres, Guzzo and Segoviano (2010) and it reviews how sovereign swap spreads in the euro area can be discomposed on measures of sovereigns fundamentals (sovereign-specific fiscal situation), global risk aversion and contagion. Additionally, we are going to assess how each of those components have affected the spreads during the current financial crisis, putting special emphasis on the Greek crisis, which has affected many European countries lately. The first component, developed in Espinoza and Segoviano (2010), explores the index of global risk aversion (IGRA) component. IGRA allows us to use CDS spreads in computing probabilities of default by typify the market price of risk relied on risk aversion. The second component is contagion, distress dependence, or Spillover coefficient (SC). SC is developed by Segoviano and Goodhart (2009), and it characterizes the probability of distress of a country conditional on other countries (in the sample) becoming distressed. The third component, country-specific fundamentals (CSF), is obtained by each countrys stock of public debt and budget deficit as a share of GDP. The goal of this paper is may be divided in three parts (i) to probe the approach functionality and accuracy in discomposing spreads regarding each factor (ii) to analyze sovereign risk transmission progress since crisis started, (iii) to broad the spectrum of the original research including recent information. For this goal, we are going to consider our reference period is from July 2007 to date. The structure of the paper is as follows: section III introduces the advantages of the model, section IV develops the theoretical framework around the model, section V describes the estimation model, section VI Describes the Data set t o be use, section VII develops the empirical test, section VIII Describe results, section IX conclusions. The choice of the sovereigns included in the study was based mostly not only on the importance to understand what factors have been most relevant in explaining the distress that Euro Area countries have experienced after the Greek event, but also on data availability. Our study is including ten of the twelve original countries included in the EMU. These countries are Germany, France, Italy, Spain, Netherlands, Belgium, Austria, Greece, Ireland and Portugal. Finland and Luxemburg were excluded because of lack of long and reliable CDS spread information. III. ADVANTAGES OF THE MODEL Although there is previous literature, the approach to be reviewed provides useful insights into the analysis of sovereign spreads by discomposing them onto (i) global risk aversion, (ii) sovereign fundamentals and (iii) contagion. Global risk aversion. There is more research trying to asses the impact of risk aversion; however some of the former papers use proxies affected by other factors resulting in inaccurate conclusions (Codogno et al, 2003). The advantage of all these methods is that they are based in observable measures; therefore information is readily accessible. Other papers, for instance, try to extract the risk-aversion component from sovereign spreads series; therefore, depending on the sample. Segoviano, Caceres, Guzzo (2010) measure of risk aversion is based on the methodology developed by Segoviano, Espinoza (2010) which bigger advantage is that it is independent of the data sample Sovereign fundamentals. We are going to use sovereigns stock of public debt ad budget deficit as a share if GDP. Using linear interpolation on quarterly data, we get daily series. Contagion. Another innovation in the study. The spillover coefficient (SC) is the measure of distress dependence where contagion comes from. SC characterizes the probability of one sovereign getting distressed conditional on other countries getting distressed. SC is a methodology developed by Caceres, Guzzo and Segoviano, (2010) and it is based on Goodhart, Segoviano (2009). Spillover is particularity important under a specific environment such as the EMU. The dependence among sovereigns the spillover coefficient is measuring includes among others trade, capital flows, and contingent liabilities (macro-financial linkages) among them. Contingent liabilities are important, since a sovereign in distress within the EMU becomes a contingent liability to the others. Previous research argues movement in spreads is caused for the level of short-term interest rates due to a strong corr elation not only between interest rates and government bonds spreads, but also between spreads of corporate and government bonds (Manganelli and Wolswijk (2007). They argue that because of low interest rates, investments on the government bond market increased and spreads narrowed; however, during the crisis in 2007, it was not the case. While spreads kept widening, interest rate were historically low; therefore, one of the important questions become, what is driving this spreads-movement if not interest rates?. To include measures or global risk aversion and contagion in the analysis of sovereign swaps spreads makes from this methodology a reliable and innovative alternative. Knowing what are the factors affecting the movements in the spreads and the specific nature of risk transmission into the EMU is a crucial point for decision-making, for instance, sovereign spreads might exhibit movements without any considerable change in their fundamentals. Within the EMU environment, a weak sovereigns fundamentals concern all others, because the sovereign in distress is going to be supported by the rest of the Union. Sovereigns monetary and fiscal policies have a huge impact in government bond yields; therefore bond yields do not allow us to get accurately the default risk premium. Instead, it is proposed to look Credit Default Swap rates (CDS), spread on bonds denominated in the same currency (in this case EURO) or interest rate swap spreads. Any of the proposed options have advantages and disadvantages; however, because of the interest rate swap market is one of the most liquid and because it was one of the first financial markets following the creation of the European Union, Segoviano, Caceres and Guzzo (2010) defined swap spreads as the measure for sovereign default risk for their methodology. To illustrate the importance of the methodology, it is important to describe the findings resulted from its development. For research purposes, Caceres, Guzzo and Sego viano (2010), divided the last global financial crisis in four phases. They defined these phases according to common behavior among sovereigns. The four phases are (i) Financial crisis buildup (July 2007-2008), (ii) Systematic outbreak (October 2008 March 2009), (iii) Systematic response (April 2009 October 2009), (iv) Sovereign risk (November 2009 March 2010). Their finding can be summarizing as follows: Financial crisis buildup (July 2007-2008). Sovereigns such as France and Germany were benefited by increase in risk aversion due to investors behavior to look for safer assets. For other sovereigns, spreads widened Systematic outbreak (October 2008 March 2009). Austria, Belgium, Ireland and Netherlands, sovereigns with financial systems and other concerns, started to struggle. Systematic response (April 2009 October 2009). Risk aversion felt due to policies to support banks. Swap spreads started to narrow. Sovereign risk (November 2009 March 2010). Spillovers and worsening fundamentals among countries with fiscal concerns like Spain, Portugal, Greece and Italy started to have effects and their spreads widened.

The Adventures Of Huckleberry Finn By Mark Twain - 874 Words

Always Do Right. This Will Gratify Some People and Astonish the Rest (as qtd. in â€Å"Famous Twain Quotes† 1). Mark Twain’s virtuous dedication in this quote is only the surface of his expressed ideas on morality. In his extensive literary work, Twain has frequently used the morality of his characters and the methods of their moral progressions as central themes. Such as with The Adventures of Huckleberry Finn, the moral progression of Huck himself is notably displayed. In the novel, Mark Twain posits that morals come from one’s experience primarily and mocks morals that come from the church, all despite claims that the most prominent and auspicious source is the community. Consistently throughout the novel, Huckleberry Finn experiences a†¦show more content†¦That development shows one’s experience playing the largest role in one’s morals. In the novel, the church lies in opposition to one’s experience. Majorly the target of Twain’s derision throughout the novel, the church is a typically ineffective and insubstantial moral source. The Grangerford versus Shepherdson feud is a setting in which a certain sermon about the stark opposite theme of the feud is ironically placed in the middle of it. As Huck describes it, this â€Å"[p]retty ornery preaching - all about brotherly love† (Twain 83) is a tactic of blatant juxtaposition. The hypocritical acceptance of the sermon by the families while continuing the conflict is an explicit illustration by Twain of the typically weightless, hollow morals conveyed by organized religion. Twain continues his mocking of the Church through another depiction of a hysterical spiritual meeting in Arkansas. The â€Å"just crazy and wild† (Twain 99) crowd inspired by the concurrent religious speech and the demagogy of the king and duke is meant to display the commu nity’s gullibility in the vanguard. Twain uses the hysteria as another negative example of the vacuous mortality of the church and their frenzied followers. Regardless of Twain s points on the precedence of one’s experience in morality, opposing views state the community possesses greater presence andShow MoreRelatedThe Adventures of Huckleberry Finn by Mark Twain830 Words   |  3 PagesThe Adventures of Huckleberry Finn by Mark Twain is â€Å"A Great American Novel†, because of its complexity and richness. Twain writes dialogue that brings his characters to life. He creates characters with unique voice and helps the reader connect to the book. Anyone who reads it is forced to develop feelings for each character. Even though there is a great amount of controversy over the use of some choices, such as the â€Å"n word†, it makes the book more realistic. 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Twain grew up in America’s southern states during the early 1800’s, a time in which moral confusion erupted within the minds of humans. The Adventures of Huckleberry Finn s protagonist is a young boy named Huck who freely travels alongRead MoreThe Adventures Of Huckleberry Finn By Mark Twain1375 Words   |  6 Pagesmention the years spent growing and maturing physically. Teenagers are stuck in an inbetween state where they must learn who they want to become and what they want to be when they grow older. The same is true for Huckleberry Finn, from the book â€Å"The Adventures of Huckleberry Finn† by Mark Twain. This is a book that was written in a time of great confusion over moral codes and standards. 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Born in Florida, Missouri Mark Twain and his family moved to Hannibal, Missouri where Twain discovered and fell in love with the mighty Mississippi River. The river and his life in Hannibal became his inspiration and guiding light in most of his writing. Although Twain loved the river and did a great deal of traveling, he eventuallyRead MoreThe Adventures Of Huckleberry Finn By Mark Twain1005 Words   |  5 Pages In the Adventures of Huckleberry Finn written by Mark Twain in the 19th century is about a young boy named Huck Finn and Jim, a runaway slave who go on an adventure. The two travel on a raft along the Mississippi river creating a bond and making memories. Mark Twain presents Huckleberry Finn as a dynamic character who at first views Jim as property and eventually considers Jim as a friend, showing a change in maturity. 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Edexcel Igcse Economics Answer - 49663 Words

Answers: Section A: The Market System Chapter 1 (a) In all of the photographs goods are being traded. In A, people are buying goods from market traders in a souq. In B, goods are being sold by auction. In C, shoppers are buying goods from a supermarket. And finally, in D, cars are being bought at a car lot. (b) In C, shoppers queuing at a checkout will pay the price that is displayed on the labels of products (or at the point of sale). Shoppers will either pay the price shown or choose not to buy the various products. In D, the price is determined through negotiation between the car salesperson and the buyer. There is likely to be a price displayed for the car but this is usually a starting point for negotiations to begin. The†¦show more content†¦Demand is forcing up the price. On the other hand, if there are only a few bids this means that demand is low and the price of the product will also be low. If there are no bids at all this means that there is no demand and the product will go unsold. Sometimes on eBay there may be lots of people selling the same or very similar products. This means that supply is high and the effect will be to lower prices. Chapter 2 Getting started: (a) According to the table, when the price of fleeces is $50, 5,000 fleeces will be purchased per week. (b) As the price of fleeces goes up the number purchased per week falls. For example, when the price is increased from $50 to $70 the number of fleeces likely to be purchased falls from 5,000 to 3,000. (c) When the price of fleeces is lowered, the number purchased per week rises. For example, if the price is reduced from $50 to $40 the number of fleeces likely to be purchased rises from 5,000 to 6,000. Question 1: (a) If the rugby union club charges 40 Euros for a fixture, the attendance would be 5,000. (b) To fill the stadium the price must be set at 10 Euros. At 10 Euros 30,000 spectators would be attracted. This is full capacity. Exam practice – The Byron Bay Surf Shack: (a) Effective demand shows how much would be bought (i.e. how much people can afford to buy and would actually buy) at any given price. It does not mean how much people would like to buy

Springfield Master Planned Community Samples †MyAssignmenthelp.com

Question: Discuss about the Springfield Master Planned Community. Answer: Introduction Over the past decades, with the overall increasing global population and changes in the lifestyles and standard of life of people across the world, there have been considerable changes in terms of the demands of types of housings among residents in the global scenario. Keeping the aspects of greater conveniences of the residents and better utilization of scarce land resources and other resources in consideration the concept of planned community has been gradually coming into existence in the contemporary periods and the same has already developed in many countries including the USA, the UK, Australia and others[1]. The term Planned Community refers to a kind of residential development where the overall infrastructure, consisting of housings, roads, natural resources, stores, connectivity and other amenities of life, is designed with care such that together they can make living in these communities convenient and easy. In general, planned communities are developed in such a way that apart from well-equipped houses, all the other facilities required for a better quality of life, like shopping centers, health care centers, schools, etc. are present within a small perimeter. In this context, several such communities are being developed in Australia, of which the one in the Springfield Lakes region of the country, specifically the Greater Springfield, is considered to be one of the best master planned community being developed in the recent times. Developed from scratch, in the previously underdeveloped but natural resource and greenery rich Springfield Lake region, these planned community have suff icient greeneries and natural resources as well as robust connectivity with the urban areas, so as to facilitate the different everyday activities of the residents, both personal as well as professional. The Springfield planned community region provides a host of facilities, which are targeted to increase the convenience of the personal as well as professional lives of those who tend to reside in this region. However, there also remains some aspects on which the planners need to emphasize further so as to make the planned community even more appealing to the potential clients. These are discussed in the following sections. Pros of residing in the Springfield Master Planned Community There are widespread benefits of staying in planned community in the Springfield region of Australia, few of the primary ones being discussed in this essay. The primary benefit of staying in planned community is the presence of almost all the amenities required for a healthy, enjoyable and productive lifestyle within manageable distances. This allows the residents to live a hassle free life, where they do not need to travel long distances and bear the burden of traffic and wastage of time to get the basic requirements of their life[2]. The Springfield planned community, though situated in off route area, can be seen to be usually of all the amenities like communication, grocery stores, internet facilities, health care facilities and entertainment resources, which facilities better lifestyle. The community also has access to schools, health care centers, emergency services and a host of transport and communication facilities with other parts of the country, as can be seem from their r oute map: Another positive implication of planned communities is the presence of higher securities as a whole. Considering the fact that in the contemporary period the family structures have been reducing in size and the overall criminal activities in the society, the protection of people, especially the vulnerable share of population, inclusive of children, elderly people and women becomes an issue of immense concern. The Springfield commuunity, in this aspect, has provisions of providing a more secured environment for the residents, with high end security features and patrolling guards around the residential facilities. It is also found to be equipped with basic health care services, also ensure health securities of the elderly residents to a considerable extent. This makes the planned community in Springfield even more appealing to the new age nuclear families where the security of the elderly people as well as that of the children is one of the primary requirements which the families seek while looking for an accommodation. The provision of shared amenities also adds to the advantages of residing in planned communities. In case of living in ad hoc residential facilities, people need to buy all their requirements individually, thereby making it expensive and constricting their choices. This also leads to inefficient usage of scarce resources. Springfield on the other hand has built up different necessary as well as recreational facilities which are available to its residing members, provided that the maintenance fees are paid by all of them. There remain provisions for all the members to enjoy all the amenities which include schools, community centers, walking trails, care units and others[4]. The presence of proper management also helps in proper and hassle free regular maintenance of the properties, which decreases the burden on the members individually. This also increases the efficiency of utilization of resources in the planned community, thereby contributing positively to the overall economy. The residents of Springfield Lakes also get the chance to socialize and live in a friendly neighborhood, which improves their quality of life. There also remains provision of vehicle parking, cycle routes, parks and community recreation centers for a better quality of life of the residents. Thus, from the above discussion it can be asserted that there remains several positive implications for the families, especially the modern nuclear ones, with children and adult members, to buy properties in the master planned community in the Springfield Lake region. The comfort, presence of amenities and high security inside as well as outside the community accounts for the same. However, the community does have several negative implications too, unlike what is portrayed in its advertisements, which are discussed in the following section. Cons of residing in Springfield Master Planned Community However, in spite of the presence of huge facilities and benefits of residing in the equipped and integrated planned community in Springfield, there remain several drawbacks of the same. One of the primary issues, which the potential residents face while trying to buy properties in this planned community, is the issue of high maintenance fees and HOA fees. The master planned community in the Springfield Lake region, is one of the best in the country inclusive of all the necessary as well as luxurious amenities[5]. However, these conveniences, which are enjoyed by the residents in this community, do not come free of cost and the residents are required to pay maintenance fees on a regular basis. These fees are often high as compared to normal residences, thereby creating a tradeoff between convenience and savings for the residents. Apart from the problem of high fees, the problem of externalities also exist in planned communities, where the level of individual freedom and privacy is considerably low and there also remains the problem of others determining the way of living of an individuals. Springfield is not an exception to this. In spite of its lavish expanse and beautifully created and maintained residences and amenities like parks and community areas, the residents still feel the absence of freedom to a considerable extent, due to the strict rules which the management imposes regarding the maintenance of the properties as well as in the aspects of discipline and welfare of the other residents. This restricts the creativity of the residents. The elderly people and the children have lesser contact with the outer world and needs to stay in the societies for longer time. Therefore, these people are negatively affected by the presence of such restrictions in the Springfield community. Recommendations and Conclusion Springfield planned community is one of the primary ones currently operating in the geographical boundaries of Australia. Much of the popularity of the community is attributed to the facilities it provides to its residents, the robust communication and transport networks, the school, health care, grocery stores in the walking distance and also the high security within the community. There, however remains a scope of improvement in the delivery of the services of the same in terms of cost effectiveness and the overall fees structure, the reduction of which may help in increasing the number of potential residents in these planned communities, thereby increasing the cost efficiency of the same. Addressing the drawbacks present in the infrastructure of the Springfield community can help in increasing the conveniences and the welfare of the families living in the community, by catering more to their specific needs. References McMahon, Edward,Master Planned Communities: What Does The Future Look Like? - Urban Land Magazine(2018) Urban Land Magazine https://urbanland.uli.org/development-business/master-planned-communities-what-does-the-future-look-like/ PART 14SPRINGFIELD STRUCTURE PLAN(2018) Ipswichplanning.com.au https://www.ipswichplanning.com.au/__data/assets/pdf_file/0013/2065/ips_part_14_springfield_structure_plan.pdf Qm.com.au,Top 10 Most Wanted List For Master Planned Communities(2018) QM Properties https://www.qm.com.au/top-10-wanted-list-master-planned-communities/ Springfield Lakes Community Vision - Lendlease(2018) Communities.lendlease.com https://communities.lendlease.com/springfield-lakes/living-in-springfield-lakes/community-vision/ The Pros And Cons Of Planned Communities(2018) Actforlibraries.org https://www.actforlibraries.org/the-pros-and-cons-of-planned-communities-3/