Central banks’ method of increasing money supply by printing new money and purchasing government securities. The process works as follows:
1. The central bank creates a pre-determined amount of money and uses it to buy government bonds in the market.
2. Because this reduces the supply of government bonds, their prices go up. This means that their yields are reduced.
3. The banks that sold the bonds back to the government now have more money to lend. Additionally, since the yield on bonds is lower, banks can also lower lending rates and stay profitable. Lower lending rates encourage consumers and businesses to borrow. These spur activity in the credit market and boost economic activity.
Higher money supply encourages spending and thus stimulates economic activity. However, an increase in the amount of money in circulation results to a devaluation of the currency. Prices of goods and services will rise, giving rise to inflationary concerns. Depending on the scale of quantitative easing, the rise in prices could erode the value of the currency and undermine the increase in economic activity.
The currency of Qatar. Currency code (QAR)
The second currency in a currency pair.
Essentially, the trading concept of Quantitative Analysis involves the process of applying a business or financial technique that seeks to understand behavior within the currency market by applying a complex system of mathematical and statistical modeling, along with measuring of market values and research.Generally this is made possible through the method of applying a series of numerical values to certain variables, with which quantitative analysts try to replicate reality mathematically and so predict changes and moves with the markets.There are many reasons for employing a quant (as quantitative analysts are often affectionately known) as quantitative analysis itself can be carried out for a number of reasons, such as a performance evaluation, measurement, or valuation of a certain financial instrument. For example in foreign exchange terms for a certain trading pattern or style, while it can also be used to quite accurately to predict certain real world events such as changes in the price of shares and turning points in inflation.In broader terms, however, quantitative analysis is more simply a way of measuring and interpreting certain things and events and can be used for more common paced tasks as calculating simple financial ratios such as earnings gained per share, or for more complicated reasons such as to calculate option pricing or discounted cash flow.While there is no doubt that although quantitative analysis is indeed a powerful tool for evaluating investment potential, it’s really only one side of the story and its counterpart, qualitative analysis must also be utilized in order to gain the full picture.
Informs every market individual of market prices.