Question

• Our course has covered financial markets, instruments and institutions and their roles in the economy and financial management. Write a paper that discusses financial markets, the instruments used in those markets and the institutions involved in the markets. Discuss the biblical passages that apply to financial institutions. Include the roles of money, investments and risk. Include a discussion about borrowing and the biblical principles involved in borrowing.
• Requirements: 3,500 words minimum

whats thr question/comment?

Answer 1

Financial Market-

A financial market is a broad term describing any marketplace where trading of securities including equities, bonds, currencies, and derivatives occur. Some financial markets are small with little activity, while some financial markets like the New York Stock Exchange (NYSE) trade trillions of dollars of securities daily.

Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership interest in an entity (share), or a contractual right to receive or deliver cash (bond).

A Financial Institution (FI) is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange. Virtually everyone living in a developed economy has an ongoing or at least periodic need for the services of financial institutions.

The financial instruments used in capital markets include stocks and bonds, but the instruments usedin the money markets include deposits, collateral loans, acceptances, and bills of exchange. Institutions operating in money markets are central banks, commercial banks, and acceptance houses, among others.

Principle 1: Debt is not normal
Regardless of how it seems today, debt is not normal in any economy and should not be normal for God’s people.We live in a debt-ridden society that is now virtually dependent on a constant expansion of credit to keep the economy going. That is a symptom of a society no longer willing to follow God’s directions. God told His people what He would do if they kept His statutes.

Principle 2: Do not accumulate long-term debt
It’s hard to believe that a typical American family accepts a 30-year home mortgage as normal today or that it is now possible in some cases to borrow on a home for nearly 70 years.

The need to expand the borrowing base continually forces longer mortgage loans, because expansion through taking on debt causes prices to rise through inflation. As prices rise, mortgages lengthen.

Today it requires from 40 to 70 percent of the average American family’s total income to buy an average home, even with a 30-year mortgage.

The longest term of debt God’s people took on in the Bible was about seven years.

Principle 3: Avoid surety
Surety means accepting an obligation to pay without having a guaranteed way to make the payments.

The most recognizable form of surety is cosigning a loan for another person. But surety also can be any form of borrowing in which an unconditional guarantee to pay is committed.

Principle 4: The borrower has an absolute commitment to repay
In this generation, situational ethics is widely accepted — so much so that it’s easy to rationalize not paying a debt, especially when the product or service is defective or when family financial situations seem to be out of control.

Unfortunately, many borrowers discover that it is possible for them to accumulate far more debt than they can repay and still maintain the lifestyle they want. As a result, they bail out.

Currently (2002 standards) over one million people a year now choose bankruptcy as a way to postpone or avoid repayment.