Capital Market Investments Overview Essay

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Following a scrutinizing analysis on the articles, a connection with Common underlying ideas relates to form complex information about Investment and precisely in the capital markets. This paper brings various ideas from three authors of the articles together and tries to unveil their relationship as far as capital investment is concerned. Capital investment refers to the markets in which investors purchase or sell securities. Bearing in mind the existence of the two types of capital markets, bond and stock market, Kimes, Bair, and Revell & Cassidy discuss in details the mentioned market securities.

It is through the analysis of information from these four sources that this paper derives significant facts and opinions from the authors (Kimes et al). The objective of the analysis is to bring forth reliable information from the financial analysis through various dimensions that converge to our topic of capital investment. According to Kimes analysis, “in the late September the emerging markets index dropped by 6% in one day after declining for a couple of months emerging markets stock Could have achieved 12% annualized returns” (64). Therefore, it is possible to benefit from the growing emerging markets and rise to demand. David Herro believes that the next quarter’s earnings do not determine the value of a company but some of the defaults in the stock markets, which are challenges to investors.

On the other hand, it seems that macroeconomic forces dominate market these days. According to Kimes, “when all stock is going up or down together, Individual stock picking is not going to be effective.” (64) This can affect the investors who have already invested or the potential investors. Nevertheless, Revell has outlined some of the ways to tell, “Whether the stock market is headed for a complete meltdown or poised for a roaring rally.” (68) First, watch the TED spread, which measures the difference between the rates of the USA for three months, Treasury bills and the three-months for London Interbank offered rate, or LIBOR. The wider it is, the more skittish are the banks about lending. Secondly, watch the difference between the yields on U.S. for 10 years government bonds. It reflects the premium that investors demand taking on the extra risk of default which has lately widened significantly. Finally, watch the spread for credit default swaps (CDS), contracts that insure a buyer of debt against the possibility of default…the higher the spread, the more skeptical the market of the debtor’s ability to repay (68). Conclusively, after gathering ideas from the four articles this paper depicts the prevailing conditions in the capital markets and shows the ways to deal with the arising challenges to the investors. “Most Americans do not begrudge great riches to anybody who works hard, takes real risk and create things of value” (Cassidy 80). In fact in one of the source articles Bair implies that investment in the U.S treasuries carries a lower risk than an unsecured credit card line (79). Therefore, it is true that we take the risk after understanding that it is linked to reward (profits/ returns).

Therefore, this paper brings different ideas from three authors of the articles together and tries to unveil their relationship as far as capital investment is concerned. Bair implies that investment in the U.S treasuries carries a lower risk than an unsecured credit card line.

Works Cited

Bair, Sheila. The Eurozone crisis will not go away until the banks face up to reality. New York: Fortune, 2011. Print.

Cassidy, John. Memo to the one percenters: Wake up and look out of your limos. New York: Fortune, 2011. Print.

Mina, Kimes. Personal Interview. New York, 2011. Print

Revell, Janice. Three ways to gauge a scary market. New York: Fortune, 2011. Print

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