Financial Markets

Question 1

Part 1 : Write a post for discussion assignment.( Below “Are Banks Just Sharks in Disguise?”) ( Do not exceed half page -single space-make it simple and good)

Part 2: Respond to 1 classmate ( One of other students posts are attached here in the file so you can see and have an idea and also to write a short responses to them 2-3 sentences only)

Discussion: “Are Banks Just Sharks in Disguise?”

Your text posses this question. “If I can buy a car today for $5,000 and it is worth $10,000 in extra income next year to me because it enables me to get a job as a traveling anvil seller, should I take out a loan from Larry the loan shark at a 90% interest rate if no one else will give me a loan? Will I be better or worse off as a result of taking out this loan? Can you make a case for legalizing loan sharking?” What do you think? With this in mind, one of the most maligned financial markets is the payday loan market. These short term loans, between 14-31 days long often have APR’s greater then 400% interest. Is this a type of loan similar to a loan shark and should these be allowed in the marketplace? Furthermore, lets examine bank fees, more specifically overdraft fees. In a world where technology has reduced costs, bank overdraft fees have increased. Do these fees fairly compensate the bank for the additional costs associated with an overdraft or is it more of a form of predatory interest similar to a loan shark or payday loans?

Question 2

What are the various ways in which managers in Russia extract value out of their companies disproportionate to their equity stakes? Which of these methods seem to be peculiar to the Russian environment, and which are more general and may also apply to other countries like the US?