HDalhaaawi

Aside from factors such as interest rates and inflation , the exchange rate is one of the most important determinants of a country's relative level of economic health. Exchange rates play a vital role in a country's level of trade, which is critical to most every free market economy in the world. For this reason, exchange rates are among the most watched, analyzed and governmentally manipulated economic measures. But exchange rates matter on a smaller scale as well: they impact the real return of an investor's portfolio. Here we look at some of the major forces behind exchange rate movements. Overview Before we look at these forces, we should sketch out how exchange rate movements affect a nation's trading relationships with other nations. A higher currency makes a country's exports more expensive and imports cheaper in foreign markets. A lower currency makes a country's exports cheaper and its imports more expensive in foreign markets. A higher exch...

Introduction Whenever we analyze any banking company, we’re looking at two main variables—the return a bank earns and the amount of risk. v What does “risk” mean? Risk is generally understood as “the possibility that something bad or unpleasant (such as an injury or a loss) will happen.” Risk is pervasive in most things that we do. When you drive, there’s a risk of getting into an accident. When you play, there’s a risk of getting injured. However, we often fail to recognize the importance of understanding risks to civilization. Introduction to banking risk Banking risk can be defined as exposure to the uncertainty of outcome. It’s applicable to full-service banks like JPMorgan (JPM), traditional banks like Wells Fargo (WFC), investment banks like Goldman Sachs (GS) and Morgan Stanley (MS), or any other financials included in an ETF like the Financial Select Sector SPDR Fund (XLF). Let’s look at the definition in some detail to understand its importance. Defini...