section{Securities}A of the interest rates. The major difference

section{Securities}A security is a fungible and negotiable financial instrument that holds some type of monetary value and can be traded. Generally, a security is a stock, options or a bond. So, it can represent an ownership position in a publicly-traded corporation through stock or option. It can also mean a creditor relationship with a governmental body or a corporation by holding bonds. A regulatory body oversees the transactions of securities. As an example, the regulatory role is played by Securities and Exchange Commission in the United States.In a broad sense, securities can be of following categories.egin{itemize}%subsection{Equity Securities}item Equity Securities: An equity security represents ownership interest in an entity realized in the form of any kind of shares of capital stock. The holder of equity securities are entitled to have some control over the entity or corporation commonly through voting rights.%subsection{Debt Securities}item Debt Securities: A Debt security is realized through some kind of bonds and imply a creditor relationship to the issuer entity which may be government body, corporation etc. So, the debt security have well stipulated terms of the amount of borrowed money, interest rate and maturity time. Some example of debt securities include government and corporate bonds, certificates of deposit (CDs) and collateralized securities. Debt securities are commonly issued for a fixed term with regular repayment of interest. After the specified fixed term, the debt securities can be redeemed by the issuer.%subsection{Hybrid}item Hybrid: Hybrid securities combine some characteristics of both. Some examples include equity warrants, convertible bonds etc.end{itemize}subsection{Affect on Economy}Two participants are involved in a security exchange or transaction: the issuer entity who creates the securities for sale and the investor who buy them. By selling securities, government body, municipalities, companies and other commercial enterprises can raise new capital for operations. This can be a good alternative to bank loans. Also, the investor with small capital have the opportunity to invest in potential commercial enterprises to gain profit.section{Financial Futures}Financial Futures are defined as futures contract to buy or sell a specific financial instrument at a specific future date and at a specified price. The market value of these contracts generally moves in a direction opposite to that of the interest rates. The major difference between options and financial future is that option gives the right to buy(sell) the instrument or commodity at the expiration where future contract must be fulfilled.Financial Futures generally includes the following.egin{itemize}    item Currency Futures    item Stock Index Futures    item Interest Rate Futures    item Treasury Bond Futures    item Eurodollar Deposit Futuresend{itemize}subsection{Affect on Economy}Futures can be used to hedge or speculate the uncertainty of the market. When used for hedging, futures are used as a protection to potentially unstable market movement in undesirable direction. By future contract, attempt is made to stabilize the unpredictable market changes. On the opposite, speculators want to benefit from the potential movements in the prices of the underlying assets. If market participants anticipate an increase in the price of an underlying asset in the future, they could potentially gain by purchasing the asset in a futures contract and selling it later at a higher price on the spot market or profiting from the favorable price difference through cash settlement. However, they could also lose if an asset’s price is eventually lower than the purchase price specified in the futures contract. Conversely, if the price of an underlying asset is expected to fall, some may sell the asset in a futures contract and buy it back later at a lower price on the spot.Financial future is a zero sum game, the amount one gains, someone else loses the same.section{Quantitative easing}Quantitative easing is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply. In an attempt to make financial institutes more capable of lending to consumers with more flows of liquids, central bank applies quantitative easing to supply more liquid to the financial institutes. The U.S. central bank, the Federal Reserve, implemented several rounds of quantitative easing following the 2007-08 global financial crisis. The Bank of Japan and the European Central Bank have also implemented QE recently.subsection{Benefits}The central bank attempts to regulate flow of liquid through quantitative easing. When economy stalls, central bank supplies more liquid to private sector by purchasing government bonds and thus encourage private financial institutes to lend more money and accelarate economic growth.subsection{Drawbacks}Quantitative easing should be applied in more conservative manner, too application can cause inflation. This may happen in situations when there is limited goods available for sale but the supply of liquid increases suddenly. When the supply of liquid doesn’t end up to consumers from the private banks or financial institutes, the quantitative easing will not be effective. This can also potentially make depreciation of home countries currency causing residents to buy imported goods for increased price.section{Marking-to-Market}Marking-to-Market is an accounting of current market values of assets and liabilities with the aim to provide realistic appraisal of current financial position. This is also known as fair value accounting. The current fair price value of securities is recorded regularly so that this resembles the current market value rather than book value. There are two counter parties on either side of a futures contract – an usually bullish long trader and am usually bearish short trader. The long account will be debited and the short account will be credited if the futures marked to market value goes down and the reverse happens in reverse case.Some properties of marking to market are as follow:egin{itemize}item As prices are not fixed, contracts may change over the time and that has to be recorded on regular basis. this changes lead to either profit or loss to the investors. This change also causes their accounts to be credited or debited from their margins accounts. Therefore, price change is a factor for MTM.item MTM is similar to commodity futures. This is because MTM has to deal with control and manage risks through hedging.item Interest rates rise or drop, there will be change in MTM.end{itemize}subsection{Example}As we know from our best, margin is the key to high profits. Suppose, if an investor agrees to a contract for some commodity at $20,000 and pay $1000 for right to take that position, the $1000 is the margin. If the contract values goes to $21,000 then the profit is 100 Percent. But if the value of contract goes down to $19,000 then this will cause $1000 loss. This change in margin values can also change the mark to market measurement.subsection{General Discussion}A general practice for most of the companies is that to estimate budget at the end of the fiscal year. To prepare this they must need annual financial statements which will reflect the current market value of their accounts. Also they need to determine the percentage of their loans and debt. This decisions can be taken by using MTM measurement.


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