What Is Financial Crisis Essay

2626 words - 11 pages

What is financial crisis? And how can we prevent it?TABLE OF CONTENTSAbstractJustificationIntroductionWhat Is FinanceManagement Of MoneyInvestmentTypes Of InvestmentEquity SecuritiesDebt SecuritiesDerivative SecuritiesManaged InvestmentsForm Of InvestmentShares InvestmentReal Estate InvestmentInsurance InvestmentStock MarketsStock BrokerRisk And ReturnCurrencyExchange RatesResource ManagementTypes Of Financial CrisisBanking PanicsRecessionFinancial BubbleEasy BorrowingWhat Causes Financial Crisis?CompaniesCountriesNatural DisasterSolutionConclusionRecommendationReferencesAbstractThis research report has explained the question "what is a financial crisis? And how can it be prevent?" The research report includes 4 main points : definition of finance, types of financial crisis, what triggers a financial crisis and solutions/preventions. Furthermore it includes in-depth explanations of the 4 main points and examples to support the explanations.JustificationFinancial Crisis is an event no one wants to happen however, it will occur either through an economic downturn or a natural disaster.As I intend to study finance for my undergraduate degree it is important and useful for me to gain some basic understanding about financial crisis and it will be useful during my degree course or even in the working world.Having to do research on financial crisis will help me acquire basic knowledge as well as how to prevent it from happening, and for a better future of society.IntroductionFinancial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value. Many financial crises were associated with banking panics, and many recessions occurred with these panics.Other situations that are often called financial crises include crashing of stock markets and the bursting of other financial bubbles and currency crises. Financial crises directly result in a loss of paper wealth and they do not directly result in changes in the real economy unless a recession or depression follows. (worldbank.org, 2010)What Is Finance?Finance is the set of activities dealing with the management of funds. More specifically, it is the decision of collection and use of funds. It is a branch of economics that studies the management of money, resource management and investment.Finance determines if the funds of an organization are being used in the right place aiming not to lose profits. Through financial analysis, companies and businesses can take decisions and corrective actions towards the sources of income and the expenses and investments that need to be made in order to stay competitive. (investorwords.com, 2011)Management Of MoneyThe process of budgeting, saving, investing, spending or otherwise in overseeing the cash usage of an individual, companies, organizations or countries. For example, investment professionals making investment decisions for large pools of funds, such as mutual funds or pension plans...

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