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I need some assistance with these assignment. indicators of financial system soundness Thank you in advance for the help!
I need some assistance with these assignment. indicators of financial system soundness Thank you in advance for the help! The aim of this essay is to outline the business model that the business analyst develops in an effort to determine the project's potential success or failure or whether the risk-free rate should be used as the alternative of the financial model. The investment sector chosen is the financial sector. Choice of Investment The financial sector can be defined as the stock category that contains the firms whose main job is the provision of services relating to finance to the commercial, as well as the retail customers. The sector comprises of entities ranging from banks, insurance companies, and investment funds to the real estate. As a business analyst, the choice to invest the 100 million United States dollars in the real estate and the investment funds was inevitable (Kolb, 2010). When making an investment choice, a number of items are considered to ensure that the investment will be profitable. The investor has to analyze the extent of risk that he or she can handle. For instance, in choosing to buy bonds or shares, the risk is high since the funds are not insured. The investor has to choose the best investment mix or portfolio. Considering an investment mix is beneficial especially when the investor is protecting or guarding against unanticipated losses. The assets allocation should be carried out in a way that the risk is spread and high to ensure higher returns. The investor has to consider diversifying the investments to ensure that the risk of losses is not extreme. For instance, it is advised that the investor should not make huge investments in one sector of the economy. Otherwise, should the sector fail, all his or her investments would be submerged? With this knowledge, the investor decided to make the following decision. Money's 60 % was invested in the building of a prominent rental building on the outskirts of Chicago while the remaining 40 million dollars were invested in purchases of bonds of the Microsoft and the Unilever companies (Lockie, 2013). Having chosen the investment portfolio, it is significant to note that financial stability is, therefore, crucial when it comes to sustaining economic growth. Economic growth, in this case, refers to the growth of the investment. In an effort to detect the vulnerability that exists in the financial system, the macroprudential analysis model is recommended to be the best in analyzing the situation of a financial system. The analysis involves the identification of the financial soundness indicators and some of the methods that are used in their analysis (Robert, 2006). Macroprudential Analysis This is defined as the analysis of the economy that seeks to evaluate and examine the soundness of the financial system while taking into consideration the vulnerability and of a given financial system. The analysis involves the use of quantitative information mostly involving FSIs. The use of other indicators of the economy that give a broader picture in matters of finance and the economy is also recommended. Using this model I shall establish and investigate the linkages that exist between the real economic sector and the financial system (Mesonnier, 2012). The model will also assist in the scenario analysis and also in the testing of the stresses that may occur in this business investment field. Through the model, I will be able to note the system's sensitivity to the various economic shocks together with the resilience to the shocks. In a broader perspective, macroprudential .analysis in this sector will help in the analysis of qualitative information which relates to the financial system structure, its institutional and also regulatory framework so as to get an additional sense to make the financial system architecture strong.
