Many a times we read about Hot Money in newspapers. Which among the following options rightly describes hot money?
(A)Hot money is useful and generally durable and is good for the country in all weathers
(B)Hot money is dangerous and volatile and leaves the country in bad weather conditions
(C)Hot money is good and adds to the development of the country & it comes from exports of services
(D)Hot money is bad & useless as its arises from unusual activities like casinos, gambling, horse races, speculations etc.
(E)Hot money is neither good nor bad , but is just a part of the country’s monetary system and gets altered with the money supply
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Hello mate here is your answer»»»
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Hot money is currency that moves regularly, and quickly, between financial markets, so investors ensure they are getting the highest short-term interest rates available. Hot money continuously shifts from countries with low-interest rates to those with higher rates; these financial transfers affect the exchange rate if there is a high sum and also potentially impact a country’s balance of payments. Hot money can also refer to money that has been stolen but is specially marked so it can be traced and identified.
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Hot money exists not only in regard to currencies of different countries but also in reference to capital invested in competing businesses. Banks seek to bring in hot money by providing investors short-term certificates of deposit (CDs) with interest rates that are higher than average. Once the bank lowers its interest rates, or another financial institution offers higher rates, investors withdraw hot money funds and move them to take advantage of the higher interest rates.
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Hope this will help you»»»
________________________
Hot money is currency that moves regularly, and quickly, between financial markets, so investors ensure they are getting the highest short-term interest rates available. Hot money continuously shifts from countries with low-interest rates to those with higher rates; these financial transfers affect the exchange rate if there is a high sum and also potentially impact a country’s balance of payments. Hot money can also refer to money that has been stolen but is specially marked so it can be traced and identified.
_____________________________
Hot money exists not only in regard to currencies of different countries but also in reference to capital invested in competing businesses. Banks seek to bring in hot money by providing investors short-term certificates of deposit (CDs) with interest rates that are higher than average. Once the bank lowers its interest rates, or another financial institution offers higher rates, investors withdraw hot money funds and move them to take advantage of the higher interest rates.
____________________________
Hope this will help you»»»
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