Please answer this discussion and please also put the reference. the discussion
ID: 394426 • Letter: P
Question
Please answer this discussion and please also put the reference. the discussion must be at least 250 words. Please, i need in few hours.
Activities in financial markets have direct effects on individuals’ wealth, the behavior of businesses, and the efficiency of our economy. Some people argues that there are three financial markets deserve particular attention: the bond market (where interest rates are determined), the stock market (which has a major effect on people’s wealth and on firms’ investment decisions), and the foreign exchange market (because fluctuations in the foreign exchange rate have major consequences for the U.S. economy. What do you think? Are these three markets most important and have the most direct effect on individuals' wealth. If not what other markets do you believe have a more direct effect on an individuals' wealth?
Explanation / Answer
These three are the most important markets having a direct effect on the individuals' wealth. In case of individuals' wealth real estate market also has a significant effect on individual's wealth. As per a Federal Reserve study, Housing Wealth, and, Consumption; Housing wealth is 50 percent of household net worth. The consumption is nearly 66.6 percent of the GDP. Housing wealth movements are associated with housing consumption. US Housing wealth is greater than the GDP of 14.4 trillion dollars. 80 percent of this is the stock of owner occupied homes. The remaining is the rental housing stock - Residential real estate in the non-corporate non-farm business. Housing wealth changes are significant in understanding cycles, and, trends in aggregate consumption expenditures.