Question 71 of 100
Q. One of the direct roles of supervisors in an investment management firm is to:
Answers
Answer:
prevent financial contagion
Answer:
Financial contagion
Explanation:
Financial contagion refers to "the unfold of market disturbances – mostly on the disadvantage – from one united states to the other, a system discovered thru co-movements in exchange charges, inventory expenses, sovereign spreads, and capital flows". monetary contagion can be a ability risk for international locations who're looking to combine their economic gadget with international financial markets and institutions. It helps give an explanation for an monetary disaster extending throughout neighboring nations, or even areas.
Financial contagion occurs at each the global level and the domestic level. at the domestic level, typically the failure of a domestic financial institution or monetary middleman triggers transmission whilst it defaults on interbank liabilities and sells property in a fire sale, thereby undermining self belief in comparable banks.
An example of this phenomenon is the following turmoil within the usa economic markets. worldwide economic contagion, which occurs in both superior economies and growing economies, is the transmission of monetary crisis throughout economic markets for direct or indirect economies. however, underneath modern-day economic device, with the large extent of coins go with the flow, along with hedge fund and cross-local operation of huge banks, economic contagion typically occurs concurrently both amongst domestic establishments and throughout international locations. The cause of economic contagion usually is beyond the explanation of real economy, such as the bilateral trade volume.
One of the direct roles of supervisors in an investment management firm is to:
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