Questions on Interest Rate, Flash Trading, Sustainable Business

2021-07-09 23:11:18
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Vanderbilt University
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Essay
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1. What is the current yield on the 10 yr Treasury bond?

Treasury yield is a rate of interest that the Government pays to borrow for a given period of time. The current yield on the 10 years Treasury bond is the return on investment as a percentage that the Government pays an investor when it borrows money for a period of 10 years. It is a very important yield that shows how the investor feels about the current state of the economy. Current treasury yield on a 10-year bond can drive investors into a risky investment when it shows the investor that it can produce higher returns on investment (Pender, 2007).

2. Why is this important and explain the current market forces that drive this interest rate?

A treasury yield on 10-year bond is a long-term treasury security with an expiry period of ten years and it generates higher investment returns than short-term securities. It is also important in signaling the investor confidence. This is because when there is an increase in the investors confidence, the price of a ten-year Treasury bond decreases and the return on investment (yield) increases. This situation occurs because the investor will feel they are likely to receive the high return on their investment and eventually feel relaxed to play safe. In the contrary, the price increases due to high demand for the less risky investment hence a decline in the yield of the bond.

There are different current market forces that drive the interest rates of a bond. They include the price of a Government bond which is affected by the geographical location of a nation. When the price of a bond is high, the demand for investment increases thus lowering the yield (interest rate).Another important factor that affects this interest rate is time to maturity. Long-term bonds have higher investment returns because the investor is paid after a longer period of time when the business outlay ties up the money.

3. Research and discuss flash trading?

Flash trading is an automated business practice operated by stock exchanges. It is a business practice that uses computer technology to provide traders with an opportunity to view orders first before other in the marketplace. Through this flash, traders can project the changes in the stock market (Stephen, 2009). Flash trading, therefore, ensure that the market center keeps a trading platform for those who want to sell or buy shares post relevant information on a given stock exchange before relaying trade information to other countries. This helps flash traders to first have the opportunity to view the trade information before others. When the business deal is entered between the beneficiary and the flash trade, a locked market prevails with an assurance price on the order. Firms doing this business always maximize profits because they are entitled to rebates or charged lower fees for participating in flash trade when the deal is completed on a home exchange and is not sent to the stock exchange of the competitors.

4. How is the concept of sustainable business practice both local and global?

The concept of sustainable business is practiced both locally and globally in the same way. To have a sustainable business, it is important for both local and global businesses to consider the interest of other stakeholders such as employees more than the interest of the organization such as profit (Docekalova and Kocmanova, 2016). Local and global businesses should also be mindful of the environment it operates. Both should dispose of its waste products in a manner that does not pollute the environment. A sustainable business should be worried about their actions that do not maintain the environment. Finally, both these businesses must ensure that they offer business programs that benefit both the community and the business itself (Farah, 2015). Sustainable business practices which these business organizations should hold include how to minimize waste, how to reduce carbon emission and to donate to the local community.

 

References

Docekalova, M. P.; Kocmanova, A. (2016). "Composite indicator for measuring corporate sustainability". Ecological Indicators.61: 612623. doi:10.1016/j.ecolind.2015.10.012

Farah, Paolo Davide (2015). "Sustainable Energy Investments and National Security: Arbitration and Negotiation Issues". JOURNAL OF WORLD ENERGY LAW AND BUSINESS.

Stephen Schuler (2009). "Comments Regarding SR-NASDAQ-2009-043 ("Flash Order")" (PDF). US Securities and Exchange Commission.

Pender, K. (2007). "Treasury takes new whack at savings bonds". The San Francisco Chronicle. Hearst. Retrieved February 14, 2007.

 

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