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21 October, 05:04

What are the two views on why asset prices fluctuate so much that they lead to financial crises and bank failures?

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  1. 21 October, 06:35
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    In one view, the asset prices are objectively based on fluctuating principles, whilst in the certain, psychological factors and prejudices play an important role.

    Explanation:

    As the rate of interest increases, the price of the investments declines because the yield on risk-free investing can sometimes be greater to buyers. On the other hand, the price of assets is rising as interest rates are falling.

    This is usually the interest rate owed by small investors on an approved FDIC portfolio, checking account, term deposit acct or mutual fund of the monetary sector. This is now the so-called US "risk-free" limit for bigger creditors, companies and individuals. Bills for the Treasury.
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