Financial Markets and Risk Essay Example | Topics and Well Written Essays - 1000 words - 1

Financial Markets and Risk - Essay Example It will also mobilize and pool savings. Financial market also helps in diversification of trade and reduction of risk. (Campion 2010, pp.67-209) It is vivid to note that this market facilitates development of financial institutions and instruments that can manage risks. (Baumol 2011, pp.122-130) The system also provides financial regulation to ensure stability of financial institution in any given economy. It is also worth noting that financial system ensures that funds are channeled from households, firms, and governments that have surplus funds to those with deficits (The economist 2011, p.39) . Various products are always provided by retail banks and non-banking institutions, these products promote movement of funds in the market to create a balance. The depository institutions always take deposits and lend out funds in terms of loans. This aspect always creates financial assets and enhances liquidity in a given market. In spite of considerable innovation in the financial sector, the popularity of depository services always persists. In Europe, bank deposits remain to be the best-known long-term savings. About 74% of European households have bank deposits. Various types of bank deposits are always offered. First, the time deposits which are not always disposable immediately because they are always fixed. Another type of bank deposits is the savings deposits whose negotiability is always restricted to a given level. (Campion 2010, pp.67-209) There are always deposits resulting from savings scheme that always require the depositor to make regular payments. Securities Varieties of securities always exist in the financial market. The investment by households in securities has tended to increase in the developing countries in the past two decades. A good example of security is bonds. A bond is a debt instrument, which is the obligation of the borrower of funds to make specified interest and principal payments to lender of funds. The bond obligates the issuer to m ake specified interest and principal payments to the holder on specified dates. (BME 2008, PP.200-223) Giving long term loans The banks always offer long-term loans to the people with fund deficit and those who need to deposit. The banks always require the borrowers to have collateral to reduce default risk. The banks always require the borrowers to pay the principal amount and the interest accrued. This is the most common method of advancing credit to the borrowers. It is also vivid to note that the amount borrowed is always returned after a specified period. (Campion 2010, pp.67-209) Implication of general increase in interest rate The general increase in interest rates always has an impact on the individual savers and investors. It is vivid to note that both savers and investors always receive this increase differently. (The economist 2011, p.39) Impact on savors Increase in the interest rates charged by banks and other financial institutions have a positive impact on the savors. The main aim of saving is always to gain interest. It is therefore fundamental to note that savors would be highly motivated to save when the interest rate is higher to gain more interest on their principal amount. (Campion 2010, pp.67-209) It is salient to comment categorically that in the periods of low interest rates savors would opt to investing in other securities like bond, notes payable and even equity as long as the return is higher. (BME 2008, PP.56-89) Impact on investors

The Chinese Made Toy Recalls at Mattel Essay Example | Topics and Well Written Essays - 1250 words

The Chinese Made Toy Recalls at Mattel - Essay Example Any toy quality/safety problems could be overcome by making manufacturing changes. The article also mentions that there was â€Å"lax regulatory enforcement,† (The Chinese-Made Toy Recalls at Mattel Inc., 179) in the factories that Mattel had set up in China, which often meant thatâ€Å"these laws were routinely ignored† (The Chinese-Made Toy Recalls at Mattel Inc., 179); problems of toy quality and safety could clearly be avoided if there was stricter control and supervision of product quality in these factories. Also, this problem of safety and quality could be eliminated if Mattel had developed its Global Manufacturing Principles before it had started a supply chain trading partnership with China, and ensured that the Chinese industries followed the rules and regulations of the GMP and terminating the partnership in case the Chinese did not follow the rules. (A2) Mattel made a number of positive responses to the toy recalls that largely had the impact of improving it s public image and in winning back its good reputation. Firstly, its CEO Robert Eckert appeared in a video, in which he made a public apology for the defected and harmful toys Mattel had produced and also pledged to â€Å"change how we work in the future†(The Chinese-Made Toy Recalls at Mattel Inc,176). Mattel representatives in September 2007 even made clear to the American Congressional Committee that the defected toys were a result of Mattel’s â€Å"own flawed toy designs†; this then lead to Mattel making changes in its manufacturing process. Apart from this, Mattel also guaranteed to â€Å"increase the frequency of its paint inspections, testing every batch delivered† (The Chinese-Made Toy Recalls at Mattel Inc., 176). In 2007, it also put a check on its products that were being shipped out of its Asian factories in order to thoroughly examine them for quality and potential health hazards; this had the effect of preventing â€Å"more than two-thirds of the recalled toys from reaching consumers† (The Chinese-Made Toy Recalls at Mattel Inc,177).Lastly, Mattel set up a â€Å"Corporate Responsibility division, which had accountability internally and externally for adherence to company safety and compliance procedures† (The Chinese-Made Toy Recalls at Mattel Inc., 177). The effect of all these actions was that it restored the positive image of Mattel in the public eyes. (A3) The article includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers and customers† (The Chinese-Made Toy Recalls at Mattel Inc., 179). Between Mattel and Early Light, there is a supply chain trading partnership that involves the two companies to work with one another when making decisions about manufacturing and distributing products. As the article states, the two companies have enjoyed this kind of collaboration for 15 years, and in my opinion, the two should contin ue to work together as supply chain trading partners since this entails a number of benefits. Firstly, the long amount of time (15 years) Mattel and Early Light have worked together in collaboration means that a high level of