The State of Sovereign Wealth Funds Essay Example | Topics and Well Written Essays - 2000 words

The State of Sovereign Wealth Funds - Essay ExampleThe commonly utilised value for price excitableness is the percentage, which serves to eliminate the problems presented by changing currency values, when presenting volatility of commodities available globally. In most circumstances of international commodity price volatility, economists ordinarily utilise a common currency, equivalent the dollar to represent volatility. International businesses, however, present the calculation of volatility in terms of percentage of a specified figure. Volatility normally revolves around measurement of dispersion observed in numerous securities or market index. The calculation of volatility enables economists to predict the amount of uncertainty existing for given commodities. The uncertainties are normally presented by notable changes observed in the commodity prices. These changes are utilised in making predictions concerning constancy of stocks and expected changes, establish on previous ob servations. Volatility represents commodity risk and noble volatility indicates high investment risk in such stocks. The risk is normally presented by anticipated change, with stocks having high volatility being marked as expected to have dramatic price adjustments over a niggling duration. Price fluctuations remain a fundamental constituent of calculated volatility values established by economist. Stable commodities customarily experience minimal fluctuations hence lower volatility for such commodities. Stability in commodity prices does not occur often inwardly the free market economies as demand and tack change continuously. Expanding boundaries of national economies dissolving into the global economy have contributed to increased difficulty in trouble of commodity price volatility. Technological advancements have contributed significantly towards a global shift in the biography standards, consequently resulting in increased price volatility. Within the global economy, pric e control continues to become progressively difficult because of the existing policy discrepancies among different countries. The concept of free market has continued to create an unprecedented, torrential flux in pricing within the global market. Increases in commodity demand against the available issue continue to have a negative impact on the prices, causing increased price volatility. Investors, within the business world, commonly rely on volatility when making numerous investment decisions. Through volatility the individuals can make estimations of expected returns on investments, based on security volatility. Management of volatility remain a fundamental element for investors desire success in the constantly changing commodity prices in the free market. Though volatility could be utilised in making future predictions, numerous changes could be initiated in the management process of volatility, consequently avoiding the adverse effects created by high volatility. The busin ess decisions do following estimations from volatility consist of numerous assumptions. One major assumption in estimating volatility ashes the unchanging business environment, enabling constant business conditions. Though calculations remain accurate, as they are based on current market prices, the prevailing business conditions resulting to the result cannot remain fixed. Governments, for example, might introduce regulations and policies seeking to protect investors from adverse effects of volatility. Changes in the business