Provide a 12 pages analysis while answering the following question: Assessment brief for portfolio task 2 Assessment Brief/ Task The second task is linked to learning outcome 2. You are require. Prepa

Provide a 12 pages analysis while answering the following question: Assessment brief for portfolio task 2 Assessment Brief/ Task The second task is linked to learning outcome 2. You are require. Prepare this assignment according to the guidelines found in the APA Style Guide. An abstract is required. On the contrary, the capital flow is also blamed for several external debts and financial crises (Becker & Noone, 2009). The flow of capital is strongly influenced by the regulations of the particular country. It has been observed that when the expected rate of return changes capital can flow in and out of the countries. However, it has been ascertained that expected rate of return depends on many factors that include both exogenous and endogenous to the country which may not reflect the actual returns as determined by the fundamentals within an economy. It can be stated that currently the world is more of an open market and is continuously becoming even more integrated due to the improvement in various aspects such as financial sector and reduction in transaction costs. At the same time, in the changing international financial system large investors possess diversified portfolios. Furthermore, volatility in cross border capital flows is observed to have serious implications. It can be argued that currency crisis is not a new phenomenon. However, with the liberalization in the financial market, the occurrence of financial crisis has become more of a common phenomenon and has often been associated with significant banking crisis. At the same time, it has been contradicted that global capital movement has significantly contributed in the business cycles of both high-income and middle-income countries mostly since 1970 and during the circumstances of financial crisis (Bluedorn & et. al., 2011). Correspondingly, this essay intends to examine the extent of and the reasons for the uneven impact of global crisis on global capital movements. Trend Before the Global Crisis The increasing global and financial liberalisation and innovation along with other developments globally have resulted in increasing cross-border capital flows prior to the global crisis. This outcome can be attributed to both increasing purchase by countries across the world and rising investment. Concerning the euro area, it was observed that since the introduction of euro in 1999 the area has experienced increased cross-border financial flow (Forster & et. al., 2011). Prior to the emergence of recent global crisis, financial flows between the nations across the world were experiencing current account deficits along with surplus. The imbalances in the current account of countries were the major concern for the policy makers (Obstfeld, 2011). Despite the increase in the global capital flow, it has been witnessed that the capital flow from rich countries to poor countries has been negligible.