Answer the following macroeconomic questions Assignment

Answer the following macroeconomic questions - Assignment Example It is important for management to understand the various factors like risk management, risk diversification, market supply demand etc before making important investments. One of the major factors which led the mortgage crisis in the U.S. is the failure of the regulations in the U.S. mortgage and derivative markets. Actually, the regulations contribute to prudent lending or encourage excessive risk taking by increasing the confidence level of investors in the system which is highly controlled and regulated. However, the old regulations have become ineffective in the current global financial system and there is a need to bring change in the old regulations by introducing new ones. The incompetent and dishonest players are harming the consumers and mortgage broking sector and very few barriers have been made to keep them out of this industry. Therefore, through regulations, the competent and incompetent participants need to be distinguished so that a strong and stable system could be bu ilt. This will surely encourage the investors to take risks and increase their confidence in the industry.