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Financial Institutions, Markets and Money (11th Edition) | |
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The Financial System | |
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An Overview of Financial Markets and Institutions | |
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Chapter Preview | |
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Learning Objectives | |
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The Financial System | |
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Financial Markets and Direct Financing | |
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Do You Understand? | |
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People & Events: Wall Street Faces Global Competition | |
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Types of Financial Markets | |
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The Money Markets | |
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The Capital Markets | |
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Do You Understand? | |
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Financial Intermediaries and Indirect Financing | |
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Do You Understand? | |
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Types of Financial Intermediaries | |
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Do You Understand? | |
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The Risks Financial Institutions Manage | |
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Regulation of the Financial System | |
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Do You Understand? | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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The Federal Reserve and Its Powers | |
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Chapter Preview | |
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Learning Objectives | |
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Origins of The Federal Reserve System | |
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People & Events: Free Banking and Wildcat Banks | |
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The Current Structure of The Fed | |
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Monetary Powers of the Board of Governors | |
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The Fed's Regulatory Powers | |
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Independence of The Fed | |
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Do You Understand? | |
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The Fed's Balance Sheet | |
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Computing a Bank's Excess Reserve Position | |
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The Fed's Role In Check Clearing | |
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Federal Reserve Tools of Monetary Policy | |
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People & Events: A Contrast In Style: Greenspan versus Bernanke | |
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Calculating a Bank's Reserve Position | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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The Fed and Interest Rates | |
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Chapter Preview | |
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Learning Objectives | |
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Federal Reserve Control of The Money Supply | |
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The Fed's Influence on Interest Rates | |
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The Treasury Department and Fiscal Policy | |
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Do You Understand? | |
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Goals of Monetary Policy | |
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People & Events: The Fed as Lender of Last Resort: Preventing a Financial Panic | |
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The Fed and the Economy | |
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People & Events: Black Monday | |
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Complications of Monetary Policy | |
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Anatomy of a Financial Crisis | |
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Do You Understand? | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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How Interest Rates Are Determined | |
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The Level of Interest Rates | |
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Chapter Preview | |
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Learning Objectives | |
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What Are Interest Rates? | |
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The Real Rate of Interest | |
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Loanable Funds Theory of Interest | |
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Do You Understand? | |
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Price Expectations and Interest Rates | |
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People & Events: Irving Fisher (1867-1947): Economist | |
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Do You Understand? | |
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People & Events: Estimating the Expected Rate of Inflation from TIPS | |
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Forecasting Interest Rates | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Bond Prices and Interest Rate Risk | |
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Chapter Preview | |
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Learning Objectives | |
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The Time Value of Money | |
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Do You Understand? | |
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Bond Pricing | |
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People & Events: Rogue Trader Incurs Huge Financial Losses for French Bank | |
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Calculating the Price of a Bond Using a Financial Calculator | |
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Bond Yields | |
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Calculating the Yield to Maturity on a Bond | |
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Do You Understand? | |
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Important Bond Pricing Relationships | |
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Interest Rate Risk and Duration | |
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Calculating the Duration of a Bond | |
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People & Events: Betting the Farm on Interest Rates and Losing | |
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Do You Understand? | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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The Structure of Interest Rates | |
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Chapter Preview | |
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Learning Objectives | |
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The Term Structure of Interest Rates | |
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Using the Term Structure Formula to Calculate Implied Forward Rates | |
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Do You Understand? | |
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Default Risk | |
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People & Events: The Credit-Rating Club | |
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Tax Treatment | |
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Do You Understand? | |
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Marketability | |
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Options of Debt Securities | |
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Do You Understand? | |
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Behavior of Interest Rates over the Business Cycle | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Part III, Financial Markets | |
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Money Markets | |
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Chapter Preview | |
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Learning Objectives | |
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How the Money Markets Work | |
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Economic Role of the Money Markets | |
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Characteristics of Money Market Instruments | |
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Treasury Bills | |
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Calculating the Discount Yield | |
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Calculating the Bond Equivalent Yield | |
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Do You Understand? | |
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Federal Agency Securities | |
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Fed Funds | |
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Other Major Money Market Instruments | |
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People & Events: Lehman Brothers "Creative" Accounting: Repos 105 and | |
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Money Market Participants | |
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The Impact of the 2007-2009 Financial Crisis on the Money Markets | |
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People & Events: How Breaking the Buck (Almost) Broke the Commercial Paper Market | |
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Do You Understand? | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Bond Markets | |
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Chapter Preview | |
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Learning Objectives | |
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Functions of the Capital Markets | |
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U.S. Government and Agency Securities | |
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People & Events: What Do Negative Yields on TIPS Tell Us? | |
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Do You Understand? | |
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State and Local Government Bonds | |
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Corporate Bonds | |
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Do You Understand? | |
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Financial Guarantees | |
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Securitized Credit Instruments | |
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Financial Market Regulators | |
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Bond Markets Around the World Are Increasingly Linked | |
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The Impact of the 2007-2009 Financial Crisis on the Bond Markets | |
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Do You Understand? | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Mortgage Markets | |
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Chapter Preview | |
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Learning Objectives | |
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The Unique Nature of Mortgage Markets | |
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Types of Mortgages | |
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Do You Understand? | |
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Mortgage Qualifying | |
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Do You Understand? | |
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Mortgage-backed Securities | |
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Determining How Much Home You Can Buy | |
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Mortgage Prepayment Risk | |
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Do You Understand? | |
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Participants in the Mortgage Markets | |
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People & Events: The Rise and Fall of Fannie and Freddie | |
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Relationship between Mortgage Markets and the Capital Markets | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Equity Markets | |
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Chapter Preview | |
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Learning Objectives | |
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What Are Equity Securities? | |
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Equity Markets | |
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Equity Trading | |
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Global Stock Markets | |
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Regulation of Equity Markets | |
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Do You Understand? | |
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Equity Valuation Basics | |
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Do You Understand? | |
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Valuing a Stock | |
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Equity Risk | |
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Do You Understand? | |
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Stock Market Indexes | |
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People & Events: Circuit Breakers, Black Monday, and the Flash Crash | |
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The Stock Market as a Predictor of Economic Activity | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Derivatives Markets | |
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Chapter Preview | |
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Learning Objectives | |
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The Nature of Derivative Securities | |
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Forward Markets | |
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Futures Markets | |
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Uses of the Financial Futures Markets | |
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Hedging Risk in a Stock Portfolio | |
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Risks in the Futures Markets | |
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Do You Understand? | |
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Options Markets | |
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Do You Understand? | |
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Regulations of the Futures and Options Markets | |
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Swap Markets | |
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People & Events: Swap Market Regulation | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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International Markets | |
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Chapter Preview | |
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Learning Objectives | |
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Difficulties of International Trade | |
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Exchange Rates | |
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Balance of Payments | |
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Foreign Exchange Markets | |
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Spot and Forward Transactions | |
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Using Forward Contracts to Hedge Exchange Rate Risks | |
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People & Events: The Big Mac Test of Purchasing Power Parity | |
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Capital Flows and Exchange Rates | |
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Do You Understand? | |
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Government Intervention in Foreign Exchange Markets | |
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Using Purchasing Power Parity to Determine the Expected Exchange Rate | |
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Financing International Trade | |
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Do You Understand? | |
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International Money and Capital Markets | |
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The Globalization of Financial Markets | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Commercial Banking | |
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Commercial Bank Operations | |
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Chapter Preview | |
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Learning Objectives | |
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An Overview of the Banking Industry | |
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Balance Sheet for a Commercial Bank | |
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The Source of Bank Funds | |
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Do You Understand? | |
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Bank Uses of Funds: Bank Investments and Cash Assets | |
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Bank Uses of Funds: Loans and Leases | |
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Loan Pricing | |
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Analysis of Loan Credit Risk | |
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People & Events: What's Your Score? | |
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Do You Understand? | |
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Fee-Based Services | |
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Off-Balance-Sheet Banking | |
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Do You Understand? | |
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Bank Earnings | |
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Bank Performance | |
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Do You Understand? | |
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Bank and Financial Holding Companies | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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International Banking | |
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Chapter Preview | |
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Learning Objectives | |
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Development of International Banking | |
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Regulation of Overseas Banking Activities | |
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Delivery of Overseas Banking Services | |
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People & Events: Credit Risk, Subprime Mortgage Crisis of 2007, and Challenges to the Banking Sector | |
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Do You Understand? | |
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International Lending | |
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Do You Understand? | |
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Foreign Banks in the United States | |
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Future Directions of International Banking | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Regulation of Financial Institutions | |
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Chapter Preview | |
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Learning Objectives | |
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Reasons for Regulation | |
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Bank Failures and Regulation | |
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People & Events: WaMu and the Destructive "Power of Yes" | |
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Safety and Soundness Regulation: Deposit Insurance | |
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Do You Understand? | |
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Deposit Insurance Issues | |
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Do You Understand? | |
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Safety and Soundness Regulation: Capital Requirements | |
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Do You Understand? | |
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Bank Examinations | |
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Structure and Competition Regulations | |
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Consumer Protection Regulations | |
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People & Events: Dual or Dueling Banking Systems? | |
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Bank Regulators | |
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Do You Understand? | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Financial Institutions | |
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Thrift Institutions and Finance Companies | |
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Chapter Preview | |
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Learning Objectives | |
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Historical Development of Savings Institutions | |
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Operations of Savings Institutions | |
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Do You Understand? | |
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Credit Unions | |
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People & Events: Demographic Change Brings Opportunity | |
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People & Events: Commercial Banks Versus Credit Unions | |
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Thrift Institutions Around the Globe | |
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Do You Understand? | |
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Finance Companies | |
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Do You Understand? | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Insurance Companies and Pension Funds | |
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Chapter Preview | |
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Learning Objectives | |
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Insurance | |
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People & Events: 9/11 and Katrina: Insurance Coverage Disputes | |
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The Insurance Industry | |
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Do You Understand? | |
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Life and Health Insurance | |
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Do You Understand? | |
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Property and Liability Insurance | |
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Calculating Policyholders' Surplus | |
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Do You Understand? | |
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Pensions | |
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Measuring Insurance Company Profitability with the Combined Ratio | |
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Do You Understand? | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Investment Banking | |
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Chapter Preview | |
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Learning Objectives | |
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The Relationship between Commercial and Investment Banking | |
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Primary Services of an Investment Bank | |
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People & Events: Where, Oh, Where Have All the Investment Banks Gone? | |
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Do You Understand? | |
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Private Equity | |
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Evaluating a Venture Capital Investment | |
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Do You Understand? | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Investment Companies | |
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Chapter Preview | |
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Learning Objectives | |
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Investment Companies | |
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Open-end Mutual Funds | |
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Calculating Net Asset Value | |
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People & Events: Money Market Mutual Funds Breaking the Buck | |
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Closed-end Mutual Funds | |
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Exchange-traded Funds | |
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Do You Understand? | |
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Hedge Funds | |
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People & Events: Hedge Funds and the Dodd-Frank Wall Street Reform and Consumer Protection Act | |
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Do You Understand? | |
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Real Estate Investment Trusts | |
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Do You Understand? | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |
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Risk Management in Financial Institutions | |
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Chapter Preview | |
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Learning Objectives | |
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The Dilemma: Profitability versus Safety | |
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Liquidity Management | |
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Do You Understand? | |
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People & Events: Operational Risk | |
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Managing Credit Risk | |
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Do You Understand? | |
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People & Events: Counterparty Controversy: AIG and Its Risky Risk Management | |
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Measuring and Assessing Interest Rate Risk | |
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Hedging Interest Rate Risk | |
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Do You Understand? | |
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Measuring Interest Rate Risk | |
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Summary of Learning Objectives | |
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Key Terms | |
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Questions and Problems | |
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Internet Exercise | |