The Equity Shala

The Federal Funds rate is the rate banks charge each other for overnight loans of reserves. Those reserves are held by banks at the Federal Reserve, and the rate is set by the Federal Reserve Open Market Committee (FOMC). While the Fed Funds rate is the main instrument for implementing monetary policy , it’s important to note that the federal funds rate isn’t the same as the discount rate. The discount rate is the rate the Fed charges banks for short-term loans, whereas the Federal Funds rate is a rate banks charge each other for reserves. The Federal Funds rate has an important role in setting monetary policy. The Federal Reserve sets a target for the Federal Funds rate, and other interest rates in the economy, such as mortgage rates and credit card rates, generally follow. The Fed Funds rate also influences long-term interest rates, such as 10-year Treasury notes. When the Fed lowers the Federal Funds rate, it usually leads to lower long-term rates, which ...

Ah, the stock market game . To some, it’s an exciting opportunity to try to turn a small investment into a much larger one, and to others it’s a source of stress and anxiety. But regardless of your opinion, there’s no denying that playing the stock market game can be a great way to learn about investing, finance, and the market. For those not familiar, the stock market game is basically a simulated stock market in which players invest virtual money in stocks, bonds, and other assets. Players receive a set amount of money to start and can select from a range of stocks. The goal is to make the most money over the course of a certain amount of time. The Origin The Stock Market Game was created by the Securities Industry Association (SIA) in 1977. It was created to assist educators in teaching students about personal finance and the stock market. The program was later acquired by SIFMA Foundation for Investor Education and is now known as " InvestWrite " IMVESTWRITE S...

The First Republic Bank was established in the early 1990s, Headquartered in San Francisco, California, but unfortunately, its life would be short-lived. By the mid-90s, the bank had already failed due to a number of issues. Primarily, the bank relied heavily on high-interest-rate loans, which meant that they were unable to tap into more profitable niches. As a result, the bank was unable to keep up with its growing debt and eventually had to be closed down. Another major factor in the failure of the First Republic Bank was its failure to diversify its loan offering s. Rather than catering to a variety of customers, the bank tended to focus on one particular type of loan - installment loans - and as a result, encountered difficulty when trying to attract new customers. Additionally, the bank did not keep up with modern banking techniques , such as moving money electronically in order to remain competitive. Ultimately, the technological inadequacies meant that the bank was...

The Silicon Valley Bank (SVB) collapse is a devastating reminder of the potential consequences of mismanagement and fiscal irresponsibility, as well as a story of what could happen if financial organizations aren't as carefully managed as they should be. In 2016, SVB collapsed as a result of a $6.4 billion loan gone wrong and the failure of the institution's leadership to properly manage its investments and funds.  SVB, which had been in business for more than 20 years, was a “bridge bank” that specialized in providing capital to venture capital firms and high-tech start-ups. It was the largest bridge bank in the US at the time. But after a series of risky investments, many of them outside the bank's usual business practice, the bank hit serious trouble. Unfortunately, the SVB collapse showed that the company’s leadership had made some very bad decisions when it came to lending and investment practices. Over-leveraging was the primary cause of SVB's collapse, as the in...

In the United States stock market, there are some spectacular scams that have been perpetrated over the years. From Ponzi schemes to insider trading, these scams have cost investors billions of dollars and created an atmosphere of mistrust in the stock market. Here we will look at some of the greatest scams in US stock market history and how they were perpetrated. Bernie Madoff Scandal The most notorious of all US stock market scams is that of Bernie Madoff. Madoff was a broker who operated one of the most successful investment firms on Wall Street. Through a mixture of deception and fraudulent activities, Madoff was able to convince his investors that the returns they were receiving on their investments were legitimate. Although it was later discovered that much of the money being invested was simply being reinvested to create the illusion of higher returns, the scheme cost investors a whopping $17 billion. CEO stock options backdating scandal Another major stock market scam was the C...

The NASDAQ The NASDAQ (National Association of Securities Dealers Automated Quotations) is a stock exchange that was founded in 1971 to become the world's first electronic, screen-based stock market . The exchange model provided a revolutionary platform for the execution and settlement of stock transactions, representing a major step forward in the improvement of market liquidity, transparency, and market efficiency. Prior to 1971, stock traders relied on the “price-time” system, which meant that orders were executed based on a combination of price and order time. This system was inefficient and produced results that were often disadvantaged to one party or the other. The creation of the NASDAQ changed the game by introducing an automated system that allowed orders to be processed based on price only.  The launch of the NASDAQ was met with strong demand, and by the end of 1975, the exchange’s market capitalization had reached 3.2 billion dollars. The exchange launch also coincided...