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Go to your LMS interface and access a document titled “Financial Stock Market and Economic Growth” under the “Downloads” tab. Get this document downloaded, read it thoroughly and answer the following questions:
Briefly describe the Factor and its mechanism that leads to economic growth as described in the article. (2.5 marks)
Briefly describe the role; an inefficient financial market fails to perform for the inventors’ encouragement. (1.25 marks)
List down the steps taken by the Cameroon Govt. to develop Douala Stock Exchange to be an efficient stock market. (1.25 marks)
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Aslam o Alaikum!
This GDB looks some tough.
anyone share some ideas plzzzzzzz
Ans(1): The factor that can lead to economic growth is the stock market development as it is shown in the article. The reason behind is that with the help of stock market, many of the companies are funded and may investments take place with the help of it. It therefore makes the companies productive and if the companies are productive, it will definitely lead to the economic growth of the country. Investors invest directly in the stock market because they have this surety that they can buy and sell the shares of the company anytime they want. This is the important factor which can lead to the economic growth of the country.
Ans(2): The role that an inefficient financial market fails to perform for the investors’ encouragement is failure to have market capitalization. The reason is that there is no stock market culture to be feel or seen in that environment and as a result, no active markets are witnessed in that economy which ultimately results in failure to perform for the investors’ encouragement. Market capitalization can be increased by having an increasing GDP which in turn can create favorable impression towards the investors’. The main role that can lead to an inefficient market is the decreasing market capitalization.
Ans (3): The steps that were taken by the Cameroon Govt. to develop Douala Stock Exchange to be an efficient stock market are:
1. They initiated the financial sector program.
2. Created DSX on 1st December 2001.
3. A public limited company was formed with the Board of Directors and a starting capital of 1.8 billion francs.
4. Its motive was to ensure the granting of credit, diversify the available finance, investment facilities to the general public and to favor privatization programs.
But please do this in ur own words
Please Discuss here about this GDB.Thanks
Our main purpose here discussion not just Solution
We are here with you hands in hands to facilitate your learning and do not appreciate the idea of copying or replicating solutions.
thanxx for shuring bilal.....
Q 1: Briefly describe the factor and it mechanism that leads to economic growth as described in the article?
Ans: Levine (1991) showed a positive relation between financial stock market & economic growth by issuing new financial resources to the firms. The financial stock markets facilitate higher investment & the allocation of capital, & indirectly the economic growth. Sometimes investors avoid investing directly to the companies. Because they cannot easily withdrew their money at the time of need. But through the financial stock market they can easily, quickly buy and sell their stock with more independence. A efficient stock market contribute to attract more investment by financing in productive projects that leads to economic growth, mobilize demotic savings, allocate capital proficiency, reduce risk by diversifying and facilitate exchange of goods and services. Finical development also leads to economic growth of country by funding entrepreneurs and in particular by channeling capital to the entrepreneurs with high returns projects.
Q 2: Briefly describe the role of an insufficient financial market fails to perform the investor’s encouragement?
Ans: insufficient financial market fails to perform the investor’s encouragement because, they don’t effect the gross domestic product, they don’t offer lower risks to the investors, there profitability ratio is also low investors always want low risk and higher profitability sometime they can affored high risk but the profitability should also be high.
Q 3: List down the steps taken by Cameroon Government to develop Douala Stock exchange to be an sufficient financial market?
Ans: The below mentioned steps were taken by Cameroon Government to develop Douala Stock exchange to be an sufficient financial market. Initiated financial sector reform program. Has increased the effort of creating a stock market of the country to stimulate economic growth. Thus Douala stock exchange was created on 1st December 2001.
An increase in the capacity of an economy to produce goods and services, compared from one period of time to another. Economic growth can be measured in nominal terms, which include inflation, or in real terms, which are adjusted for inflation. For comparing one country's economic growth to another, GDP or GNP per capita should be used as these take into account population differences between countries.
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