Front cover image for Principles of money, banking & financial markets

Principles of money, banking & financial markets

Print Book, English, ©2009
Addison-Wesley, Boston, MA, ©2009
xxxiv, 617 pages : illustrations (some color) ; 24 cm.
9780321339195, 9780321500854, 0321339193, 0321500857
236117398
Machine derived contents note: Part I The Basics
Chapter 1
Introducing Money, Banking, and Financial Markets
An Overview
Why Study Money, Banking, and Financial Markets?
Careers in Banking and Financial Markets
An Overview
Specific Opportunities
Trading
Sales
Financial Economist
Fixed-Income Research
Loan Officer
Bank Examiner
Key Terms
Chapter 2
The Role of Money in the Macroeconomy
Introducing Money
Going Out on a Limb: The Launch of the Euro
Who Determines Our Money Supply?
The Importance of Money I: Money Versus Barter
The Importance of Money II: Financial Institutions and Markets
Money, the Economy, and Inflation
Bank Reserves and the Money Supply
How Large Should the Money Supply Be?
Velocity: The Missing Link
Money and Inflation
Going Out on a Limb: Will Paper Money Ever Disappear?
Summary
Key Terms
Questions
Chapter 3
Financial Instruments, Markets, and Institutions
Flow of Funds
Financial Instruments and Markets
Bonds Represent Borrowing
Stocks Represent Ownership
Mortgages Involve Real Estate
Derivatives: Options and Futures
The Money and Capital Markets: A Summary
Financial Intermediaries: Purposes and Profile
The Role of Financial Intermediaries
Financial Intermediaries in Profile
Summary
Key Terms
Questions
Part Ii Financial Instruments And Markets
Chapter 4
Interest Rate Measurement and Behavior
Calculating Interest Rates
Simple Interest
Compound Interest
Coupon Rate on Bonds
Current Yield
Yield to Maturity
Off the Record: The Million Dollar Lottery: A Case of Misleading
Advertising?
Zero-Coupon Bonds
Reading the Financial News: Government Bond Market Quotations
The Inverse relationship Between Yields and Bond Prices
Why Long-Term Bonds Are Riskier Than Shorts
Nominal Versus Real Interest Rates
Return Versus Yield to Maturity
What Determines the Level of Interest Rates?
Supply and Demand Determine the Interest Rate
Why Does the Interest Rate Fluctuate?
Behind Supply and Demand
The Importance of Inflationary Expectations
In the News: Bonds Move Higher
Cyclical and Long-Term Trends in Interest Rates
Summary
Key Terms
Questions
Chapter 5
The Term and Risk Structure of Interest Rates
The Term Structure of Rates and the Yield Curve
Supply and Demand
The Pure Expectations Approach
The Liquidity Premium Modification
The Preferred Habitat Approach
Real-World Observations
Going Out on a Limb: Is the Shape of the Yield Curve a Crystal Ball?
An Aside on Marketability
Risk and Tax Structure of Rates
Summary
Key Terms
Questions
Appendix: Bond Price Volatility: Duration Versus Maturity
Key Terms
Chapter 6
The Structure and Performance of Securities Markets
Nature and Function of Securities Markets
Types of Markets
Auction Market
Brokered Market
Dealer Market
Primary Versus Secondary Markets
Efficiency of Secondary Market Trading
In the News: Senator Pushing for Accurate Prices
Going Out on a Limb: The Computer Will Prevail
Efficient Capital Markets and Regulation
In the News: Investment Dartboard
Summary
Key Terms
Questions
Chapter 7
The Pricing of Risky Financial Assets
Economic Uncertainty
A World of Certainty
Consequences of Uncertainty and Risk Aversion
An Aside on Measuring Risk
Principles of Diversification
In the News:When a Simpler 401(k) Is Just Dumb
The Risk Premium on Risky Securities
Going Out on a Limb: Buy an Index Fund
Summary
Key Terms
Questions
Chapter 8
Money and Capital Markets
The Government Bond Market
Types of Securities and Investors
How the Market Works
Treasury Bills: Auctions and Yields
Repurchase Agreements
Bank-Related Securities: CDs and Eurodollars
Corporate Securities
Corporate Bonds
Going Out on a Limb: Junk Is Good
Reading the Financial News: Corporate Bond Market Quotations
Commercial Paper
Municipal Securities
In the News: General Obligation Bonds Might Yield More than Revenue
Bonds
Mortgage Securities
In the News: Perusing the Subprime Detritus
The Stock Market
Structure of the Stock Market
Reading the Financial News: Stock Market Quotations
What Determines Whether Stock Prices Rise or Fall?
Off the Record: The Dow Jones Versus the S&P 500
Money and Stock Prices
Going Out on a Limb: Bubbles and the Stock Market
Summary
Key Terms
Questions
Chapter 9
Demystifying Derivatives
An Overview of Financial Futures
Using Financial Futures Contracts
In the News: Weatherproof Adopts Apparel Industry's First-Ever Weather
Hedge
Reading the Financial News: Financial Futures Quotations
Pricing Financial Futures Contracts
An Overview of Options Contracts
Using and Valuing Options
Reading the Financial News: Options Quotations
What Determines Options Premiums?
Going Out on a Limb: Don't Blame Derivatives
An Overview of Swaps
Why Swap?
Valuing a Swap
Summary
Key Terms
Questions
Chapter 10
Understanding Foreign Exchange
What Determines Foreign Exchange Rates?
Reading the Financial News: Foreign Exchange Quotations
Why Do Exchange Rates Fluctuate?
In the News: Whistler Adjusts Prices to Lure Washington Skiers Back
How Global Investors Cause Exchange Rate Volatility
Fixed Versus Floating Exchange Rates
How Fixed Rates Are Supposed to Work
In the News: Let China's Yuan Float
International Financial Crises
Summary
Key Terms
Questions
Part Iii Banks And Other Intermediaries
Chapter 11
The Nature of Financial Intermediation
The Economics of Financial Intermediation
Going Out on a Limb: Lemons and MP3 Players: Two examples of
Adverse Selection
In the News: Housing Tilting Economy Down
The Evolution of Financial Intermediaries in the United States
The Shifting Sands of Interest Rates
The Regulation Q Security Blanket
The Birth of the Money Market Mutual Fund
The Saving and Loan Crisis
The Rise of Commercial Paper
The Institutionalization of Financial Markets
The Transformation of Traditional Banking
Financial Intermediaries: Assets, Liabilities, and Management
Summary
Key Terms
Questions
Chapter 12
Depository Financial Institutions
The Fundamentals of bank Management
Use of Bank Funds
Sources of Bank Funds
Bank Profitability
Bank Risk
Leverage Risk
Credit Risk
Interest Rate Risk
In the News: Local Banks Weigh Hedging Risks
Trading Risk
Liquidity Risk
Major Trends in Bank Management
The Consolidation Within the Banking Industry
The McFadden Act
The Erosion of McFadden
Measuring Consolidation
The Economics of Consolidation
In the News: Bank Mergers Make Raising Funds for Projects Harder
Nontraditional Banking
Globalization
American Banks Abroad
Foreign Banks in the United States
The Euromarkets
The Subprime Mortgage Crisis
In the News: Rate of Mortgage Delinquencies Rises
Nonbank Depository Institutions
The Thrifts
Summary
Key Terms
Questions
Chapter 13
Nondepository Financial Institutions
Insurance Companies and Pension Funds
Property and Casualty Insurance Companies
In the News: The Coming Deluge
Pension Funds
Mutual Funds
In the News: Getting In on the New Gold Rush
Finance Companies
Securities Brokers and Dealers and Investment Banks
Venture Capital Funds, Mezzanine Debt Funds, and Hedge Funds
Banks Versus Nondepository Institutions
Summary
Key Terms
Questions
Part Iv Financial System Architecture
Chapter 14
Understanding Financial Contracts
How Business Obtains Financing
Financing Small Businesses
Financing Midsize Businesses
Financing Large Businesses
The Economics of Financial Contracting
In the News: A Journey into the Secret Heart of Capitalism Turns into a
Roller Coaster Ride
Asymmetric Information and Financial Contracting
Contracting and the Firm Continuum
Consumer Lending, Financial Contracting, and Securitization
Summary
Key Terms
Questions
Chapter 15
The Regulation of Markets and Institutions
The Regulation of Financial Markets in the United States
The Regulation of the Primary Market
The Regulation of the Secondary Markets
The Regulation of Commercial Banks in the United States
Off the Record: Insider Trading: Efficiency Versus Equity
The U.S. Banking Regulatory Structure
Regulations to Protect Individual Depositors and Financial System Stability
Deposit Insurance
Moral Hazard and Deposit Insurance
Risk-Based Capital Requirements
Risk-Based Deposit Insurance Premiums
In the News: FDIC Premiums Seen Having Little Effect on Industry
Regulation of Nondepository Financial Intermediaries
Where Securities Market and Banking Regulation Meet: The Glass-Steagall Act, A
Collapsing Barrier
The Genesis of Glass-Steagall
The Erosion of Glass-Steagall
The Risk of Universal Banking
Summary
Key Terms
Questions
Chapter 16
Financial System Design
Information and Financial System Design
Stockholder-Lender Conflict
Manager-Stockholder Conflict
Conflict Resolution and Financial System Design
Small Firms: Stockholder-Lender Conflict
Large Firms: Stockholder-Lender Conflict
Lar
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