| Description |
1 online resource |
| Contents |
Ch. 1 Introduction -- What You Will Learn in This Chapter -- Overview -- Where We Are Going in This Book -- Contributions Made by the Financial System -- Transfers of Resources from Surplus to Deficit Units -- Other Contributions -- Recurring Themes in the Chapters Ahead -- Resources -- ch. 2 Overview of the Financial System -- What You Will Learn in This Chapter -- Introduction -- Features of an Effective Financial System -- Direct Methods of Finance -- Investment Banks -- Debt versus Equity -- Money versus Capital Markets -- Asymmetric Information -- Adverse Selection -- Moral Hazard -- Indirect Methods of Finance -- Primary versus Secondary Markets -- Primary-Market Transactions -- Secondary-Market Transactions -- Trading Platforms -- Brokers -- ch. 3 The Special Role of Commercial Banks -- What You Will Learn in This Chapter -- Background -- Commercial Bank Balance Sheet -- Assets -- Liabilities -- Net Worth (Capital) |
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Payment System and Money -- Commercial Banks and the Payment System -- Payment System Infrastructure -- Credit and Stored Value Cards -- Payments Media in the Money Stock -- Velocity (Turnover of Money) -- Liquidity Provision -- Dealing with Asymmetric Information -- Maturity Transformation -- The Safety Net and Regulatory Policy -- ch. 4 The Pricing of Financial Assets -- What You Will Learn in This Chapter -- Background -- Present Value -- Value of a Single Future Payment -- Value of a Coupon Security -- Other Applications -- Solving for Yield to Maturity -- Solving for Fixed Payments -- The Special Case of a Consol -- Maturity and Price Sensitivity -- Holding Periods versus Maturities -- Return versus Yield -- Duration -- Nominal versus Real Yields -- Appendix A Variations of the Valuation Relationship -- Appendix B Solutions Using a Financial Calculator -- Future Value -- Future Value -- A Higher Interest Rate -- Present Value of Single Cash Flow |
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Lottery Choice -- Current Price of a Coupon Security -- Price of an Aasset Providing Uneven Cash Flows -- Yield to Maturity -- ch. 5 Factors Affecting Yields -- What You Will Learn in This Chapter -- Background -- The Term Structure of Interest Rates -- The Expectations Hypothesis -- The Term Premium Hypothesis -- Market Segmentation Hypothesis -- Implicit Forward Rates -- The Role of the Term Structure -- Credit Risk -- Credit Rating Agencies -- Investment-Grade versus Below-Investment-Grade Debt -- Cyclical Behavior of Credit Risk and Spreads -- Credit Default Swaps (CDSs) -- Changing Investor Tolerance for Risk -- Liquidity -- Taxation -- Embedded Options -- Flights to Safety -- ch. 6 Principles of Portfolio Selection and Efficient Markets -- What You Will Learn in This Chapter -- Overview -- Uncertainty, Expected Return, and Risk -- Selecting a Portfolio -- Expected Return -- Risk -- Interpreting the Expression for Risk -- An Illustration |
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These Principles in Practice -- Efficient Portfolios and Risk-Return Trade-Offs -- Efficient Markets Hypothesis -- Implications for a Random Walk -- Other Implications -- Asset Bubbles -- Evidence -- ch. 7 The Money Market -- What You Will Learn in This Chapter -- Background and Basic Features of the Money Market -- Pricing -- Treasury Bills -- Auction Procedures -- The Role of Primary Dealers -- Purpose for Issuing Bills -- Commercial Paper -- Credit Quality -- Maturities -- Asset-Backed Commercial Paper (ABCP) -- Retreat of the ABCP Market -- Commercial Paper Placement -- The Role of Commercial Banks in the Money Market -- Letters of Credit and Bankers' Acceptances -- Monetary Policy Effects on the Money Market -- ch. 8 The Bond Market -- What You Will Learn in This Chapter -- Background -- Treasury Notes and Bonds -- Maturities -- Features of TIPS -- Placement -- When-Issued Trading -- STRIPS -- Secondary-Market Trading -- Reopening |
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Purposes for Issuing Coupon Securities -- Credit Quality -- Corporate Bonds -- Placements -- Tension between Bond and Shareholders -- Indentures and the Role of Covenants -- Credit Default Swaps (CDSs) -- Below-Investment-Grade Market -- Private Placements -- Secondary-Market Trading -- Munis -- Tax Considerations -- Credit Risk and Liquidity Differences -- General Obligation versus Revenue Bonds -- Placement -- Indentures -- Ratings -- Government-Sponsored Enterprises (GSEs) -- Fannie Mae and Freddie Mac -- Federal Home Loan Banks -- Features of GSE Bonds -- The Impact of Monetary Policy on the Bond Market -- ch. 9 Securitization -- What You Will Learn in This Chapter -- Background -- Obstacles to Overcome -- Asymmetric Information and Adverse Selection -- Corrective Measures -- Regulatory Capital on Ordinary Loans -- Beginnings of Securitization -- MBSs -- Ginnie Mae -- Illustration of the Process -- Fannie Mae and Freddie Mac |
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Secondary-Market Trading -- Other Mortgage Pools -- Other Securitized Loans -- Consumer ABSs -- Auto ABSs -- Credit Card ABSs -- Other Consumer ABSs -- Common Features -- The Effects of the Financial Crisis -- ABSs Involving Business Credit -- CDOs and Structured Securities -- Standard Types of Pools -- CLOs, CBOs, and CMBSs -- Structured Securities -- CMOs -- Senior-Subordinated Securities -- Effects of the Financial Crisis -- Securitization and the Integration of Credit Markets -- Monetary Policy and Securitization -- ch. 10 The Mortgage Market -- What You Will Learn in This Chapter -- Background -- Home Mortgages -- Homeowner Choices -- Standard Features of Home Mortgages -- Commercial Mortgages -- The Mortgage Market and Monetary Policy -- ch. 11 The Equity Market -- What You Will Learn in This Chapter -- Background -- Equities as a Source of Corporate Finance -- Preferred versus Common Shares -- Types of Preferred -- Primary and Secondary Markets |
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Valuation of Individual Shares -- Basic Model -- Dividend Growth -- Price-Earnings -- Some Implications -- Extending These Principles to the Stock Market -- Monetary Policy and the Stock Market -- Indexes of Stock Prices -- ch. 12 Central Banking and the Federal Reserve -- What You Will Learn in This Chapter -- Background -- Origins of Central Banks -- Constitutional Foundations -- The Century and a Quarter without a Central Bank -- Creation of the Federal Reserve -- Early Years of the Federal Reserve -- Reforms of the 1930s -- Fed Independence -- Central Bank Accountability and Transparency -- Central Bank Responsibilities -- Monetary Operations -- The Demand for Reserves -- The Supply of Reserves -- Market Equilibrium -- Setting the Federal Funds Rate through Open Market Operations -- Permanent versus Temporary Transactions -- Payment of Interest on Excess Reserves -- The Effect of the Financial Crisis on the Reserves Market |
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Interaction of Policy Instruments in the Reserves Market -- ch. 13 Monetary Polcy: The Basics -- What You Will Learn in This Chapter -- Background -- Effects of Monetary Policy on Output and Prices -- The Goal of Price Stability -- The Dual Mandate in the United States -- The Operational Counterparts to Maximum Employment and Price Stability -- Maximum Employment -- Price Stability -- Aggregate Demand and Aggregate Supply -- Aggregate Supply -- Aggregate Demand -- Monetary Policy and Aggregate Demand -- The Model -- Steady Inflation -- Rising Inflation -- Falling Inflation -- The Important Role of Inflation Expectations -- Actual and Potential Output in Practice -- Addressing Inflation -- Addressing a Shortfall in Output -- Okun's Law -- ch. 14 Monetary Policy: Challenges Faced by Policymakers -- What You Will Learn in This Chapter -- Background -- Other Forces Affecting Output and Inflation -- Lags and Other Complications -- Need to Be Forward Looking |
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Importance of the Expected Path of Short-Term Rates -- Forward Guidance -- Policy Rules -- Money Stock Rule -- Taylor Rule -- Expectations and Central Bank Credibility -- Inflation Targeting -- The Zero-Bound Constraint and the Slow Recovery from the Great Recession -- ch. 15 Financial Crises -- What You Will Learn in This Chapter -- Background -- Classic Banking Panics -- The Nightmare of the Great Depression -- Gold Standard Restraints -- The Stock Market Crash -- Bank Runs -- Massive Damage -- Broader Financial Crises -- Big Drop in Asset Values -- Runs on Suspected Institutions -- Fire Sales -- The Financial Crisis -- Background Factors -- Proliferation of Nonstandard Mortgages -- Growing Exposures of Key Financial Institutions -- The Unraveling -- Shadow Banking Stress -- Major Credit Crunch -- Policy Responses -- Dodd-Frank -- Common Threads -- ch. 16 The Foreign Exchange Market and Exchange Rate Regimes -- What You Will Learn in This Chapter |
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Background -- Features of the Market -- The Relation between Spot and Forward Exchange Rates -- Long-Run Exchange Rate Relationships -- The Real Exchange Rate -- Exchange Rate Determination in the Shorter Run -- Demand Schedule -- Supply Schedule -- Equilibrium -- Floating Exchange Rate Regime -- Fixed Exchange Rate Regime -- An Undervalued Exchange Rate -- The Dynamics of an Undervalued Currency -- An Overvalued Currency -- Variations on Fixed Exchange Rate Regimes -- ch. 17 Depository Institutions -- What You Will Learn in This Chapter -- Background -- Organization of Commercial Banks and Other Depository Institutions -- Commercial Banks -- Savings Institutions -- Credit Unions -- Economic Functions of Depository Institutions -- Payment Services -- Liquidity Provision -- Providing Credit When There Is Asymmetric Information -- Maturity Transformation -- The Balance Sheet of the Commercial Banking System -- The Balance Sheet of Savings Institutions |
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The Balance Sheet of Credit Unions -- Deposit Insurance -- Regulation and Supervision of Depository Institutions -- The Regulators -- The Focus of Regulation and Supervision -- Capital Standards -- Liquidity Standards -- Depository Institutions and Monetary Policy -- ch. 18 Mutual Funds -- What You Will Learn in This Chapter -- Background -- History -- SEC Regulation -- Role of Mutual Fund Complexes -- Types of Funds -- Open-End Funds -- Exchange-Traded Funds -- Closed-End Funds -- Mutual Funds and Monetary Policy -- ch. 19 Hedge, Venture Capital, and Private Equity Funds -- What You Will Learn in This Chapter -- Background -- Commonalities in Structure -- Hedge Funds -- Role of the Prime Broker -- Leverage -- Entry and Redemption -- Types of Hedge Funds -- Economic Value and Hedge Fund Risk -- Venture Capital Funds -- Types of Firms Selected for Financing -- Risks Involved -- Size and Stages of Financing -- Exit -- Economic Value Provided by VC Funds |
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Private Equity Funds -- Leverage -- Exit -- Economic Value Provided by Private Equity Firms -- Alternative Investment Funds and Monetary Policy -- ch. 20 Large Institutional Investors -- What You Will Learn in This Chapter -- Background -- Pension Funds -- Defined Benefit (DB) Plans -- Defined Contribution (DC) Plans -- Social Security -- State and Local Government Pension Funds -- Federal Government Retirement Funds -- Life Insurance Companies -- Life Insurance -- Annuities -- LICO Assets -- Reinsurance -- Property and Casualty Insurance Companies -- Large Institutional Investors and Monetary Policy |
| Summary |
"The current financial model has focused on money as a unique asset that is produced exclusively by commercial banks, and regulated by central banks to achieve their macroeconomic goals. However, as financial systems have evolved in the United States and elsewhere around the globe, what constitutes money has become blurred and such monetary aggregates have become highly unreliable and discarded guides to policy. As a result, central banks have had to turn to a very different approach for achieving macroeconomic goals. This approach instead focuses on influencing the prices of a broad spectrum of financial assets, and thereby the spending behavior of businesses and consumers. They do so by relying on their control over the short-term policy interest rate and its influence on the core element of all asset prices through the term structure of interest rates. This book will create a better understanding of that monetary policy so both students and professionals can get a solid understanding of this term structure relationship and how it works throughout the financial system."-- Provided by publisher |
| Notes |
Includes index |
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Machine generated contents note: Preface Chapter 1: Introduction What You Will Learn In This Chapter Overview Where We Are Going in This Book Contributions Made By the Financial System Recurring Themes in the Chapters Ahead Resources Chapter 2: Overview of the Financial System What You Will Learn In This Chapter Introduction Features of An Effective Financial System Direct Methods of Finance Indirect Methods of Finance Primary versus Secondary Markets Chapter 3: The Special Role of Commercial Banks What You Will Learn In This Chapter Background Commercial Bank Balance Sheet Payment System and Money Liquidity Provision Dealing with Asymmetric Information Maturity Transformation The Safety Net and Regulatory Policy Chapter 4: The Pricing of Financial Assets What You Will Learn In This Chapter Background Present Value Maturity and Price Sensitivity Holding Periods versus Maturities Return versus Yield Duration Nominal versus Real Yields Appendix A: Variations Of The Valuation Relationship Appendix B:Solutions Using A Financial Calculator Chapter 5: Factors Affecting Yields What You Will Learn In This Chapter Background The Term Structure of Interest Rates Credit Risk Liquidity Taxation Embedded Options Flights to Safety Chapter 6: Principles of Portfolio Selection and Efficient Markets What You Will Learn In This Chapter Overview Uncertainty, Expected Return, and Risk Selecting a Portfolio Efficient Portfolops And Risk-Return Trade-Offs Efficient Markets Hypothesis Chapter 7: The Money Market What You Will Learn In This Chapter Background and Basic Features of the Money Market Pricing Treasury Bills The Role of Commercial Banks in the Money Market Letters of Credit and Bankers Acceptances Monetary Policy Effects on the Money Market Chapter 8: The Bond Market What You Will Learn In This Chapter Background Treasury Notes and Bonds Corporate Bonds Munis Government-Sponsored Enterprises (GSEs) The Impact of Monetary Policy on the Bond Market Chapter 9: Securitization What You Will Learn In This Chapter Background Obstacles to Overcome Beginnings of Securitization-MBS Other Securitized Loans-Consumer ABS ABS Involving Business Credit-CDOs and Structured Securities Securitization and the Integration of Credit Markets Monetary Policy and Securitization Chapter 10: The Mortgage Market What You Will Learn In This Chapter Background Home Mortgages Commercial Mortgages The Mortgage Market and Monetary Policy Chapter 11: The Equity Market What You Will Learn In This Chapter Background Equities as a Source of Corporate Finance Preferred versus Common Shares Primary and Secondary Markets Valuation of Individual Shares Price-earnings Extending These Principles to the Stock Market Monetary Policy and the Stock Market Indexes of Stock Prices Chapter 12: Central Banking and the Federal Reserve What You Will Learn In This Chapter Background Origins of Central Banks Constitutional Foundations The Century And A Quarter Without A Central Bank Creation of the Federal Reserve Early Years of the Federal Reserve Reforms of the 1930s Fed Independence Central Bank Accountability and Transparency Central Bank Responsibilities Monetary Operations Chapter 13: Monetary Policy: The Basics What You Will Learn In This Chapter Background The Operational Counterparts to Maximum Employment and Price Stability Aggregate Demand and Aggregate Supply The Model Addressing Inflation Addressing a Shortfall in Output Okun's Law Chapter 14: Monetary Policy: Challenges Faced by Policymakers What You Will Learn In This Chapter Background Other Forces Affecting Output and Inflation Lags and Other Complications Policy Rules Expectations and Central Bank Credibility Inflation Targeting The Zero-Bound Constraint and the Slow Recovery from the Great Contraction Chapter 15: Financial Crises What You Will Learn In This Chapter Background Classic Banking Panics The Nightmare of the Great Depression The Financial Crisis Common Threads Chapter 16: The Foreign Exchange Market and Exchange Rate Regimes What You Will Learn In This Chapter Background Features of the Market The Relation Between Spot and Forward Exchange Rates Long Run Exchange Rate Relationships The Real Exchange Rate Exchange Rate Determination in the Shorter Run Floating Exchange Rate Regime Fixed Exchange Rate Regime Chapter 17: Depository Institutions What You Will Learn In This Chapter Background Organization of Commercial Banks and Other Depository Institutions Economic Functions of Depository Institutions The Balance Sheet of the Commercial Banking System The Balance Sheet of Savings Institutions The Balance Sheet of Credit Unions Deposit Insurance Regulation and Supervision of Depository Institutions Depository Institutions and Monetary Policy Chapter 18: Mutual Funds What You Will Learn In This Chapter Background History SEC Regulation Role of Mutual Fund Complexes Types of Funds Open-End Funds Exchange-Traded Funds Closed-End Funds Mutual Funds and Monetary Policy Chapter 19: Hedge, Venture Capital, and Private Equity Funds What You Will Learn In This Chapter Background Commonalities In Structure Hedge Funds Venture Capital Funds Private Equity Funds Alternative Investment Funds and Monetary Policy Chapter 20: Large Institutional Investors What You Will Learn In This Chapter Background Pension Funds Life Insurance Companies Property and Casualty Insurance Companies Large Institutional Investors and Monetary Policy About the Author Index |
| Bibliography |
Includes bibliographical references and index |
| Notes |
Print version record and CIP data provided by publisher |
| Subject |
Capital market.
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Banks and banking.
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Monetary policy.
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Finance.
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finance.
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BUSINESS & ECONOMICS -- Finance.
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Banks and banking
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Capital market
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Finance
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Monetary policy
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| Form |
Electronic book
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| LC no. |
2014021382 |
| ISBN |
9781118872468 |
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1118872460 |
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9781118872055 |
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1118872053 |
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1118872231 |
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9781118872239 |
