• 2 Pages Homework 3
    Homework 3

    School: Auburn

    Course: FINANCIAL INSTITUTIONS

    Jason T. Lambert Finc 3700 03/06/12 Dr. Gerken Homework 3 1) The Big Mac Index is a list of prices of a McDonald's Big Mac from various countries around the world quoted in the local currency. Using July 16th, 2009 Big Mac prices, a Big Mac in the US cost

  • 54 Pages Chapter 03 Sample Test s-Corrected
    Chapter 03 Sample Test S-Corrected

    School: Auburn

    Course: Financial Markets And Institutions

    FINC-3700 Chapter 3 Sample Test (Based on Saunders & Cornett 5/e) 1. An 8-year corporate bond has a 7% coupon rate. What should be the bond's price if the required return is 6% and the bond pays interest semiannually? A. $1053.45 B. $1062.81 C. $1049.49 D

  • 60 Pages Chapter 04 Sample Test s
    Chapter 04 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 04 Sample Test (Based on Saunders&Cornett 5/e) 1. Federal Reserve interest rate decisions can be vetoed by the U.S. President or the Congress. True False 2. Four seats on the FOMC are allocated to Federal Reserve Bank presidents on an annual rotat

  • 5 Pages Chapter 05 Sample Test s
    Chapter 05 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 05 Sample Test (Based on Saunders& Cornett 5/e) 1. Money markets exist to help reduce the opportunity cost of holding cash balances. True False 2. The majority of money market securities are low denomination, low risk investments designed to appea

  • 5 Pages Chapter 06 Sample Test s
    Chapter 06 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 06 Sample Test (Based on Saunders & Cornett 5/e) 1. T-notes and T-bonds are issued in minimum denominations of $1,000 or multiples of $1,000. True False 2. The dirty price plus accrued interest is called the clean price of the security. True False

  • 50 Pages Chapter 07 Sample Test s
    Chapter 07 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 07 Sample Test (Based on Saunders & Cornett 5/e) 1. The process of mortgage securitization results in a separation between mortgage origination and mortgage financing. True False 2. A subprime mortgage is a mortgage made to a borrower who has a be

  • 59 Pages Chapter 08 Sample Test s
    Chapter 08 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 08 Sample Test (Based on Saunders & Cornett 5/e) 1. A seasoned equity offering occurs when an issuer that already has equity publicly trading issues new shares to the public. True False 2. Preferred stockholders have a claim senior to common stock

  • 5 Pages Chapter 09 Sample Test s
    Chapter 09 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 09 Sample Test (Based on Saunders & Cornett 5/e) 1. In 1973, the Smithsonian Agreement II eliminated fixed exchange rates for the major economies. True False 2. If the dollar is initially worth 120 yen and then the exchange rate changes so that th

  • 5 Pages Chapter 10 Sample Test s
    Chapter 10 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 10 Sample Test (Based on Saunders & Cornett 5/e) 1. The purchaser of a T-bond futures contract priced at 101-16 at the time of sale agrees to deliver $100,000 face value Treasury bonds in exchange for receiving $101,500 at contract maturity. True

  • 47 Pages Chapter 11 Sample Test s
    Chapter 11 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 11 Sample Test (Based on Saunders & Cornett 5/e) 1. In 2010, the notional value of bank off -balance-sheet activities was greater than bank industry assets. True False 2. Loans comprise the single largest asset category for a bank. True False 3. I

  • 5 Pages Chapter 14 Sample Test s
    Chapter 14 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 14 Sample Test (Based on Saunders&Cornett 5/e) 1. Because of the differences in the makeup of their major loan types, finance companies typically have shorter-term loans than banks. True False 2. The largest U.S. banks are larger than the entire c

  • 5 Pages Chapter 15 Sample Test s
    Chapter 15 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 15 Sample Test (Based on Saunders&Cornett 5/e) 1. A man has what he believes is a mild heart attack but he doesn't go to the hospital. Instead he calls his insurance agent and doubles the amount of his life insurance. This is an example of the mor

  • 5 Pages Chapter 16 Sample Test s
    Chapter 16 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 16 Sample Test (Based on Saunders&Cornett 5/e) 1. Profitability at investment banking firms has been very stable each year since 2001. True False 2. The Securities Investor Protection Corporation protects investors against losses due to unfavorabl

  • 5 Pages Chapter 17 Sample Test s
    Chapter 17 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 17 Sample Test (Based on Saunders&Cornett 5/e) 1. Hedge funds can short sell securities, whereas most mutual funds cannot. True False 2. The shares of a closed-end fund with market value of assets of $200 million and 2 million shares outstanding w

  • 6 Pages Chapter 18 Sample Test s
    Chapter 18 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 18 Sample Test (Based on Saunders&Cornett 5/e) 1. If you believe that taxes are going to go up and you will likely have to pay a high tax rate when you retire, you will probably be better off with a Roth IRA than with a traditional IRA. True False

  • 5 Pages Chapter 02 Sample Test s
    Chapter 02 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    FINC-3700 Chapter 2 Sample Test (Based on Saunders & Cornett 5/e) 1. Convertible bonds will normally have lower promised yields than straight bonds of similar terms and quality. True False 2. An investor earned a 5% nominal rate of return over the year. H

  • 4 Pages Chapter 01 Sample Test s
    Chapter 01 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    FINC-3700 Chapter 1 Sample Test (Based on Saunders & Cornett 5/e) 1. Secondary markets help support primary markets because secondary markets I. Offer primary market purchasers liquidity for their holdings II. Update the price or value of the primary mark

  • 8 Pages Chap014-Solutions
    Chap014-Solutions

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 14 - Other Lending Institutions: Savings Institutions, Credit Unions, and Finance Companies SOLUTIONS MANUAL Chapter Fourteen Answers to Chapter 14 Questions: 1. A comparison of Table 11-1 with Table 14-2 reveals that unlike banks, savings institu

  • 8 Pages Chapter-SC5-04-Appendix-C
    Chapter-SC5-04-Appendix-C

    School: Auburn

    Course: Financial Markets And Institutions

    We have seen that the money supply is a multiple of the monetary base: M = km * BM The multiplier km has the following value: km = 1 + C/D -R/D + C/D This can be rewritten the following way: km = 1 + C/D -(rd + ER/D) + C/D or in Mishkin: 1+c m = -r+e+c to

  • 11 Pages Chapter-SC5-04-Appendix-B
    Chapter-SC5-04-Appendix-B

    School: Auburn

    Course: Financial Markets And Institutions

    Before proceeding with this chapter, please familiarize yourself with the effects on the balance sheets of banks of typical bank transactions they are shown in Appendix A. Participants in the multiplier process are: - The Central Bank (the Federal Reserve

  • 7 Pages Chapter-SC5-04-Appendix-A
    Chapter-SC5-04-Appendix-A

    School: Auburn

    Course: Financial Markets And Institutions

    BASIC BANK TRANSACTIONS and their effects on bank balance sheets 1. Starting point: A standard balance sheet Assets | Liabilities -|-All assets $1,000 | All liabilities $900 | Net worth $100 | 2. A customer puts cash in his safety deposit box: Assets | Li

  • 23 Pages Topic-Risk-3200
    Topic-Risk-3200

    School: Auburn

    Course: Financial Markets And Institutions

    The concept of risk comes up all the time in discussing issues related to financial markets. As mentioned in Chapter 1, one of our 5 basic principles is that Risk requires compensation meaning that the riskier a borrower is, the higher the interest rate

  • 20 Pages Topic-Risk-3610
    Topic-Risk-3610

    School: Auburn

    Course: Financial Markets And Institutions

    1. The EXPECTED RETURN E(R) to a single asset The expected return to a single asset is a WEIGHTED AVERAGE RETURN taken over a given set of states of the world, using as weights the probabilities of each state happening: N E ( R) pi Ri taken over N states

  • 10 Pages Topic-Risk-Appendix
    Topic-Risk-Appendix

    School: Auburn

    Course: Financial Markets And Institutions

    For each observation, we have 3 data variables: the name of the subject, and two measurements which we refer to here only as X and Y. (In an actual data set, we might choose to use the letter X to refer to someones height, or the letter Y to refer to some

  • 10 Pages Chapter-SC5-02B-notes
    Chapter-SC5-02B-notes

    School: Auburn

    Course: Financial Markets And Institutions

    THE DETERMINATION OF NOMINAL INTEREST RATES HOW are market interest rates determined or, why have T-bill rates fluctuated between 1% and 15% since WWII ? To answer this, we use the theory of asset demand. In this chapter, we simplify things by assuming t

  • 12 Pages Chapter-SC5-02A-notes
    Chapter-SC5-02A-notes

    School: Auburn

    Course: Financial Markets And Institutions

    THE ORIGIN OF INTEREST At any given time, there will be people who have more money than they need for their immediate consumption, and there will be people who for some reason or other would like to be able to use more money than they have themselves at t

  • 2 Pages Chapter-SC5-19-notes
    Chapter-SC5-19-notes

    School: Auburn

    Course: Financial Markets And Institutions

    TYPES OF RISK FOUND IN FINANCIAL MARKETS The following is a list of some of the types of risk which financial institutions and investors have to worry about in financial markets. CREDIT RISK: this is the risk we take when lending money, namely the possibi

  • 14 Pages Chapter-SC5-01B-notes
    Chapter-SC5-01B-notes

    School: Auburn

    Course: Financial Markets And Institutions

    Introduction The purpose of the financial system (all the different financial markets) is to channel funds from those who have savings they want to invest to those who have a need to borrow, on terms acceptable to both parties. Def.: interest = the rental

  • 14 Pages Chapter-SC5-02C-notes
    Chapter-SC5-02C-notes

    School: Auburn

    Course: Financial Markets And Institutions

    Fact: on any given day, if you check the financial pages you will find that different categories of bonds offered for sale are offered at (sometimes widely) differing yields. This needs to be explained! To do so, this chapter will relax the assumptions th

  • 10 Pages Chapter-SC5-01A-notes
    Chapter-SC5-01A-notes

    School: Auburn

    Course: Financial Markets And Institutions

    Introduction Contemplate some recent economic events: When President Bush was first elected, we were all worrying about the huge budget surpluses we were going to have, and what to do with them - but these seem to have been turned into deficits again. A w

  • 14 Pages Chap004-Solutions
    Chap004-Solutions

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 04 - The Federal Reserve System, Monetary Policy, and Interest Rates SOLUTIONS MANUAL Chapter Four Answers to Chapter 4 Questions: 1. As part of the Federal Reserve System, Federal Reserve Banks perform multiple functions. These include assistance

  • 12 Pages Chap011-Solutions
    Chap011-Solutions

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 11 - Commercial Banks: Industry Overview SOLUTIONS MANUAL Chapter Eleven Answers to Chapter 11 Questions: 1. A depository institution is a financial intermediary that obtains a significant proportion of its funds from customer deposits. Industrial

  • 54 Pages Chapter 19 Sample Test s
    Chapter 19 Sample Test S

    School: Auburn

    Course: Financial Markets And Institutions

    Chapter 19 Sample Test (Based on Saunders&Cornett 5/e) 1. Risk arising from unhedged positions in securities, currencies, and derivatives is called market risk. True False 2. Loan charge-offs do not lead to insolvency risk because when loans are written o

  • 2 Pages Chapter 16
    Chapter 16

    School: Auburn

    Course: Financial Markets And Institutions

    FINC 3700 Chapter 16: Securities Firms and Investment Banks Securities firms and investment banks primarily help net suppliers of funds (households) transfer funds to net users of funds (businesses) at a low cost and with a maximum degree of efficiency o

  • 3 Pages Chapter 15
    Chapter 15

    School: Auburn

    Course: Financial Markets And Institutions

    FINC 3700 Chapter 15: Insurance Companies Financial institutions offer insurance services to compensate individuals and corporations (policyholders) if a pre-specified adverse event occurs, in exchange for a premiums paid to the insurer by the policyhold

  • 3 Pages FINC 3700 Chapter 10
    FINC 3700 Chapter 10

    School: Auburn

    Course: Financial Markets Institutions

    FINC 3700 Auburn University Chapter 10 1 Municipal Securities bond issued by a city or other local government, or their agencies used to finance capital projects (infrastructure) 2 Municipal Securities relationship to taxes: Tax Exempt 3 Major Characteris

  • 2 Pages FINC 3700 Chapter 9
    FINC 3700 Chapter 9

    School: Auburn

    Course: Financial Markets Institutions

    FINC 3700 Auburn University Chapter 9 1 Zero Coupon Bonds Have no coupon payment but promise a single payment at maturity 2 What determines interest paid to bondholder on Zero Coupon Bonds the difference between the price paid for the security and the amo

  • 2 Pages FINC 3700 Chapter 8
    FINC 3700 Chapter 8

    School: Auburn

    Course: Financial Markets Institutions

    FINC 3700 Auburn University Chapter 8 1 Bond Volatility The percent change in bond prices for a given change in interest rates "How sensitive a bond's price is to changes in yields 2 Effect of Coupon Rate on Bond Volatility The lower the CR the greater th

  • 3 Pages FINC 3700 Chapter 7
    FINC 3700 Chapter 7

    School: Auburn

    Course: Financial Markets Institutions

    FINC 3700 Auburn University Chapter 7 1 Real Rate of Interest (r*) equilibrium rate of interest (nominal rate of interest) + expected inflation determined by real output of economy 2 Estimated Average Real Rate of Interest 3% 3 Effect on loanable funds de

  • 3 Pages FINC 3700 Chapter 6
    FINC 3700 Chapter 6

    School: Auburn

    Course: Financial Markets Institutions

    FINC 3700 Auburn University Chapter 6 1 Secondary Markets The markets where the resale of previously-issued securities takes place Can be over-the-counter or on an exchange 2 Interdependence of Primary Markets & Secondary Markets There cannot be a well-de

  • 3 Pages FINC 3700 Chapter 5
    FINC 3700 Chapter 5

    School: Auburn

    Course: Financial Markets Institutions

    FINC 3700 Auburn University Chapter 5 1 Credit Unions Small, nonprofit, cooperative, consumer-organized, institutions owned entirely by their member-customers Their primary liabilities of credit are checking accounts called share drafts and savings accoun

  • 3 Pages FINC 3700 Chapter 4
    FINC 3700 Chapter 4

    School: Auburn

    Course: Financial Markets Institutions

    FINC 3700 Auburn University Chapter 4 1 Brokers & Dealers Assit in the buying and selling of securities after theinitial sale of a security 2 Brokers Serve as agents by bringing buyers and sellers together, and receive a commission for their services 3 De

  • 2 Pages FINC 3700 Chapter 3
    FINC 3700 Chapter 3

    School: Auburn

    Course: Financial Markets Institutions

    FINC 3700 Auburn University Chapter 3 1 The Flow of Funds has an Impact on Business Profits The Rate of Inflation Interest Rates The Production of Goods and Services in the Economy 2 In Financial Markets People buy and sell financial instruments like stoc

  • 3 Pages FINC 3700 Chapter 2
    FINC 3700 Chapter 2

    School: Auburn

    Course: Financial Markets Institutions

    FINC 3700 Auburn University Chapter 2 1 no-fault system an automobile insurance program in which drivers involved in accidents collect medical expenses, lost wages, and related injury costs from their own insurance companies 2 assigned risk pool consists

  • 3 Pages FINC 3700 Chapter 1
    FINC 3700 Chapter 1

    School: Auburn

    Course: Financial Markets Institutions

    FINC 3700 Auburn University Chapter 1 1 policy a written contract for insurance 2 policyholder a person who owns an insurance policy 3 premium the amount of money a policyholder is charged for an insurance policy 4 coverage the protection provided by the

  • 7 Pages Chapter-26-notes
    Chapter-26-notes

    School: Auburn

    Finance 3700 Financial Markets and Institutions Fall 2007 Lecture Notes CHAPTER 26: Finance Companies Sven Thommesen Banks vs. non-bank banks Definition of a bank: it is a financial institution that both accepts deposits from the public; and m

  • 16 Pages Chapter-08-notes
    Chapter-08-notes

    School: Auburn

    Finance 3700 Financial Markets and Institutions Fall 2007 Lecture Notes CHAPTER 8 Monetary policy: tools, goals, targets Sven Thommesen TOOLS: HOW THE FED CONTROLS MONEY CREATION The Fed is charged with conducting monetary policy, which includes

  • 11 Pages Chapter-22B-notes
    Chapter-22B-notes

    School: Auburn

    Finance 3700 Financial Markets and Institutions Fall 2007 Lecture Notes CHAPTER 22 (Part 2): Pension Funds Sven Thommesen Retirement savings and pension funds This section should be read in conjunction with my lecture notes called "Topic: pensi

  • 8 Pages Chapter-23-notes
    Chapter-23-notes

    School: Auburn

    Finance 3700 Financial Markets and Institutions Fall 2007 Lecture Notes CHAPTER 23 Securities firms, Investment banks, Venture capital Sven Thommesen This chapter deals with securities firms and investment banks, both of which facilitate the tra

  • 3 Pages FINC 3700 Chapter 11
    FINC 3700 Chapter 11

    School: Auburn

    Course: Financial Markets Institutions

    FINC 3700 Auburn University Chapter 11 1 Yield Curve Under Preferred-Habbit Theory allows for humps or twists in the yield curve, but limits the discontinuities possible under Segmentation Theory. 2 Holding securities with longer maturities than desired e

  • 1 Page stock review 1
    Stock Review 1

    School: Auburn

    Course: FINANCIAL INSTITUTIONS

    Jason T. Lambert Finc 3640 Investments Stock-Trak Summary 1 1. The holding period for my portfolio is -0.45%. I started the project with $1,000,000 and my current portfolio value is $995,507.19. I have only purchased stocks, and I have tried to short sell

  • 2 Pages Chapter 14
    Chapter 14

    School: Auburn

    Course: Financial Markets And Institutions

    FINC 3700 Chapter 14: Other Lending Institutions Savings institutions were created in the 1800s in response to commercial banks concentration on serving the needs of business (commercial) enterprises rather than the needs of individuals requiring borrowe

  • 3 Pages Chapter 10
    Chapter 10

    School: Auburn

    Course: Financial Markets And Institutions

    FINC 3700 Chapter 10: Derivative Securities Markets Derivative: a contract between two parties whose value is based on some underlying asset price or condition o Two parties agree to exchange a standard quantity of an asset at a predetermined price at a

  • 2 Pages Chapter 9
    Chapter 9

    School: Auburn

    Course: Financial Markets And Institutions

    FINC 3700 Chapter 9: Foreign Exchange Markets Foreign trade is possible because of the ease with which foreign currencies can be exchanged Internationally active firms often seek to hedge their foreign currency exposure Foreign exchange markets: markets i

  • 3 Pages Chapter 8
    Chapter 8

    School: Auburn

    Course: Financial Markets And Institutions

    FINC 3770 Chapter 8: Stock Markets Primary stock markets allow suppliers of funds to raise equity capital Secondary stock markets are the most closely watched and reported of all financial markets Stockholders are the legal owners of a corporation o Ri

  • 3 Pages Chapter 7
    Chapter 7

    School: Auburn

    Course: Financial Markets And Institutions

    FINC 3700 Chapter 7: Mortgage Markets Mortgage: a loan to an individual or business to purchase homes, land, or other real property Different than stocks/bonds: o Backed by specific piece of real property o Primary mortgages have no set size or denomina

  • 2 Pages Chapter 6
    Chapter 6

    School: Auburn

    Course: Financial Markets And Institutions

    FINC 3700 Chapter 6: Bond Markets Capital markets: equity and debt instruments with maturities of more than one year Bonds: long-term debt obligations issued by corporations and government units o Traded in bond markets Types of bonds: o Treasury notes

  • 5 Pages CHAPTER 2
    CHAPTER 2

    School: Auburn

    Course: Financial Markets And Institutions

    CHAPTER 2: DETERMINATES OF INTEREST RATES Interest Rate Fundamentals Nominal interest rates: the interest rates actually observed in financial markets o Directly affect the value (price) of most securities traded in the money and capital markets, home an

  • 5 Pages CHAPTER 1
    CHAPTER 1

    School: Auburn

    Course: Financial Markets And Institutions

    CHAPTER 1 Financial Markets: structures through which funds flow Primary vs secondary markets o Primary markets: markets in which users of funds (corporations) raise funds through new issues of financial instruments (stocks and bonds) Fund users have ne

  • 7 Pages Test One study guide outline
    Test One Study Guide Outline

    School: Auburn

    Course: FINANCIAL INSTITUTIONS

    FINC 3700 Exam 1 Study Guide Intro Development of modern financial intermediaries (examples, new risks) Not Plumbing contractors according to the secretary of treasury Financial institutions as intermediaries o Banks pool depositors funds and provide lo

  • 2 Pages panic of 1907 similarities
    Panic Of 1907 Similarities

    School: Auburn

    Course: FINANCIAL INSTITUTIONS

    The similarities between the panic of 1907 and that of the mortgage crisis of 2007 and 2008 are the two panics are based on large corporations in New York that are toxic. The recent focus was on Lehman Brothers, who has been a banking giant since the civi

  • 1 Page Homework 1
    Homework 1

    School: Auburn

    Course: FINANCIAL INSTITUTIONS

    Jason T. Lambert 01/23/12 Financial Markets & Institutions TR 9:30 Homework 1 1. Smokers on average have shorter life expectancies than that of nonsmokers. This creates a problem with trying to insure the smokers because if the insurer is unaware that the

  • 1 Page home work 2
    Home Work 2

    School: Auburn

    Course: FINANCIAL INSTITUTIONS

    Jason T. Lambert Financial Markets & Institutions Dr. Gerken 01/31/2012 Homework 2 1) What happens to the interest rate? What happens to the quantity of bonds at market equilibrium A) The interest rate will fall, so the expected return on the bonds relati

  • 3 Pages extra credit
    Extra Credit

    School: Auburn

    Course: FINANCIAL INSTITUTIONS

    Jason T. Lambert 03/23/12 Gerken Extra Credit In the early twenty-first century, our country has gone through an incredible shaking of the financial infrastructure. With the one of the greatest busts in United States history, many of the rocks our country

  • 1 Page stock trak 2
    Stock Trak 2

    School: Auburn

    Course: FINANCIAL INSTITUTIONS

    Jason T. Lambert 03/26/2012 Finc. 3640 Investments Stock-Trak Summary 2 1) My holding period return is currently 2.7%. I started the project with $1,000,000 and my current portfolio value is just under 1,027,000. I have had some ups and downs with my port

  • 9 Pages Chapter-07-notes
    Chapter-07-notes

    School: Auburn

    Finance 3700 Financial Markets and Institutions Fall 2007 Lecture Notes CHAPTER 7 Central Banks and the Federal Reserve System Sven Thommesen What is a Central Bank and why do we need one? Historically, the functions of a central bank have been

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