Question

1.

Each state issues licenses for private companies to operate savings banks within the state. Ex, the NY State Banking Department issues licenses (also called “charters”) that are mandatory to have before operating a savings bank within NY State.  explain FIVE different legal requirements in NY State to have a license to operate a savings bank.  

2.

A. Define efficient capital market. How do we know if we haven an efficient capital market?

B. people say that an efficient capital market is impossible to have, ever. Why do some say that efficient capital markets are impossible?

C. Define effective capital market. How do we know if we have an effective capital market?  

D. How would an effective capital market cause long term sustainable economic growth?  

 

Answer 1

Q1. The organisation of such an institution is a task which involves a wide variety of activities....legal economic and practical. Because of the many factors to be considered by the incorporators before the application process begins,they arrange a meeting to discuss the praposal .

Among the area which must be addressed organizing group are the following:

1.Name of the institution

2.Incorporators or directors.

3.Market

4.public convenience and advantage

5.capital funds

6.Insurance of deposits .

7.Community reinvestment act and fair lending requirements describe how the institution intends to comply with the requirements of the community reinvestment  act.also a fair lending an must be included. (Guidelines-general industry letter dated febreaury 18,2000.).

8.provide a copy of the application and all follow up material submitted to the Federal regulatory authority.

Q2.effecient capital markets:

Effecient capital markets are commonly thought of a markets in which security prices are fully reflect all relevant information that is available about the fundamental value of the securities.

The study of capital markets efficiency examines how much,how fast and how accurately available information is incorporated in to security prices.

Financial economists often classify efficiency into three categories...based on what is meant as "available information. "- The weak,semi strong and strong forms.

A large amount of empirical research has been directed at answering whether capital markets are effecient.most research has used stock price data, for two reasons.

1.stock prices are easily available.

2and the stock market is likely to be less efficient than other securities markets such as the bond market.

Opponents of Effecient market hypothesis believe that it is possible to beat the market and the stocks can deviate from their market values.