Question

Choose 4 financial markets or institutions. Briefly explain what each specializes in (mortgages, stocks, government securities, etc.).

Compare how each financial market you identified influences the US economy and global economy.

Answer 1

4 financial market are as follows-

A. Nasdaq- Nasdaq is a technological index which is representative of top United States companies which are catering to the technological sector and it will be representing various kinds of companies like Amazon as well as apple and Microsoft and other companies which are leaders in not only American market what they are also leaders in the global markets but Nasdaq will only be listing those companies which are domestic United State companies.

The impact of Nasdaq in relation to United States economy and global economy is always recognised because it is a leader when it comes to reflection of movement of all the other markets so movement in NASDAQ would be leading to movement in other markets as well.

B. Dow Jones Industrial Average- Dow Jones Industrial Average is price weighted index of all the traditional companies which are top 30 companies of United States of America and they are representative of price weighting of these companies, so this index is often accused of not represent dating the true picture of the United States economy.

Dow Jones Industrial Average will be followed in the entire world because the movement of different top stocks will be indicating the mood of stockholders in United States of America and it will be reflected in entire global economy.

C. Standard and poor 500- standard and poor 500 is a value weighted index which is representative of top 500 companies which are listed in United States of America and it will be true reflection of performance of United States economy because this will be including stocks all across the sectors.

it can also be said that standard and poor 500 is the most important index in the entire world which is followed for stock performance because it is accumulating a large number of United States companies which are top United States companies

D. Securities and exchange commission is a regulatory institution in the United States of America market and it will be controlling the American markets to a large extent because it will be implementing the rules and regulation which will be continuously framed in respect to the American Markets and it will also be a trendsetter in the global economy about managing with various companies because it is often trying to install with a very high level of investors interest protection.