The 2000s witnessed a dramatic increase in Financial Engineering that produced a
ID: 1213545 • Letter: T
Question
The 2000s witnessed a dramatic increase in Financial Engineering that produced a wide range of new loans and investment products. 1. What is Financial Engineering? 2. Provide examples of Financial Engineering that have produced new consumer loan products and investment securities. 3. How did Financial Engineering affect Adverse Selection and Moral Hazard problems prior to the 2008 Financial Crisis? I. The Saudi Riyal remains stable in comparison to the US Dollar. 1. What are the reasons for this stability? Explain with examples. 2. Do you expect that current revenue and expenditure patterns will affect the value of the Saudi Riyal in relation to the US Dollar? Explain with examples. 3. How does the Theory of Purchasing Power Parity affect your answer? What other factors does it suggest will affect the value of the Saudi Riyal? Explain with examples.Explanation / Answer
2. Financial Engineering is the combination of financial theory, mathematical tools and techniques, and engineering method. It is also known as mathematical finance. In United States International Association Quantitative Finance accredited the financial engineering program. Financial engineering is based on computer science, applied mathematics, and economic theory.
2. Credit cards are one of the best examples of financial engineering. Bank provides loan to the load credit to the consumers with the help of credit cards. Similarly health insurance is also examples of financial engineering in investment securities.
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