Question:
Case Study Analysis- 1 (20%) 1, 500 words
The Individual report will consist of stock market behaviour and exchange rate behaviour with reference to a selected country. LO1, LO2, LO3, LO4, LO8.
This case study is related to Unit-1 and Unit-2 contents. You are required to choose a country of your choice and analyze the financial markets. Follow the steps given below:-
- Select a stock market from your chose country e.g. you choose USA then you can select NYSE, AMEX, NASDAQ etc. Make sure that you choose country’s premier stock exchange. Analyze the stock market covering the following points:-
- Background of the stock exchange
- Market capitalization, liquidity, and number of companies listed on the stock exchange
- Stock price behaviour and factors affecting the stock market
- Regulation of stock market, corporate governance system and investor’s protection
2. Analyze the country’s currency behaviour against world’s major currencies. Critically evaluate those factors that have affected the country’s currency in the recent past. Also assess the impact of foreign currency on multinational corporations (MNCs).
Solution:
Introduction
The current body of knowledge demonstrates the existence of a link between the exchange rates and stock market activities. In particular, Ambos and Ambos (2009) noted that the relationship is anchored on the need to integrate financial institutions into the global level. This is with the stock market acting as a primary avenue where different firms and governments engage in mobilizing the capital for investment. The stock prices are affected by economic, market-related, and film-related factors. In the existence of these indicators, they offer a signal of the existence of higher interest rates with the upward pressure on the expected return by investors and downward pressure on specific firm value. To evaluate this concept, the current case study provides a description of NYSE stock market in the USA in the context of stock exchange background, market capitalization, liquidity and companies listed in the stock, a regulation on the stock market, corporate governance system and investors’ protection. Also, an analysis of the country’s currency behavior against the major global currencies has been carrying out with an impact of foreign currency on multinational corporations evaluated.
The New York Stock Exchange (NYSE)
Part 1
Background of Stock Exchange
The NYSE was established in 1792 with 24 stockbrokers at that time signing the Buttonwood Agreement on Wall Street in New York City (Michie, 2012). It is an American Stock Exchange on Wall Street in New York City. Its operations are based on a company registering with the NYSE where the shares of the company stock are availed for public trading. Traders interested in investing in the stock market are offered with an opportunity for buying and selling their stocks through an online platform through an exchange company. The designated market makers are involved in the trading process who act as the brokers of the company to offer liquidity and facilitating exchange process.
Market capitalization, liquidity, and Companies listed on the Exchange As noted in NYSE (2018) it currently has a market cap of US$16 trillion with an average of daily trading amounting to US$169 billion in overall trading value since 2013. As at 2018, the NYSE was the most progressive equity market globally with an overall market cap of approximately $24 trillion with their capitalization being three times larger than NASDAQ and the other US exchanges with a larger market cap as opposed to the other ten combined (Business Insider, 2014)…………………………………………………………………………………………………………………………………….Please contact us to receive guidance, support and tutorial services on this assessment based on your country of choice and any other specific instruction and expectations
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