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MGT411 Money & Banking GDB Fall 2021 Solution / Discussion

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MGT411 GDB Fall 2021 Solution idea:

 

Requirement 1

Solution

To understand this question, we need to consider the risks that could potentially affect the store value of an asset. These risks could potentially affect the store value in present or future time periods-

  1. Market risk:

It is the risk associated with the market price of an asset. There could be cases that a certain asset has a longer waiting period. This could be in the case of real estate and gold. The markets for bonds and stocks are likely to have shorter waiting period due to a large number of buyers and sellers.

  1. Volatility Risk:

The market price may fluctuate due to demand-supply conditions which could be sharply affected by public policy or exogenous factors. The fluctuation is the most in case of stocks.

 

Requirement 2

Solution

A reasonably stable currency is essential to a healthy economy. A nation’s money must be a credible store of value in order for its citizens to engage in labor and trade, save money, and spend it. A monetary unit that serves poorly as a store of value destroys all incentive to save or even earn, and reduces the ability to trade.

MGT411 GDB No 01 Solution Fall 2021

Link file 

MGT411-GDB-No-1-Solution-Fall-2021-VU-Ning.pdf

MGT411 GDB 1 Fall 2021 | Money Banking and Finance | VU

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