sumassign7

# sumassign7 - Intro Macro ASSIGNMENT 7 N Sheflin NOTES...

This preview shows pages 1–2. Sign up to view the full content.

Intro Macro N. Sheflin ASSIGNMENT 7 NOTES: Review of the financial system , introduction to some financial economics’ concepts and applications and review of some investment material. Choppy but important stuff. Note some of the HW questions are from the investment game rounds 1-2. __________________________ KEY POINTS 1. THE FINANCIAL SYSTEM Role of the financial system – channel resources from savers to investors Securities, Markets and Exchanges o Stocks, bonds mutual funds o NYSE, NASDAQ Regulation o SEC http://www.sec.gov/about/whatwedo.shtml o Fed http://www.federalreserve.gov/pf/pf.htm o FDIC http://www.fdic.gov/about/learn/symbol/index.html o OCC http://www.occ.treas.gov/aboutocc.htm o OTS http://www.ots.treas.gov/?p=AboutOTS o CFTC http://www.cftc.gov/aboutthecftc/index.htm 2. SIMPLE FINANCIAL ECONOMICS CONCEPTS Present value, discounting, compounding **MOST IMPORTANT** Risk and return **IMPORTANT** Risk, insurance, diversification **IMPORTANT** Efficient markets and random walks **IMPORTANT** ‘Stock Picking’ Behavioral finance Adverse Selection and Moral hazard (look them up) Note i=r=interest rate COMPOUNDING AND DICOUNTING/PRESENT VALUE Future Value (FV) = Present Value (PV) x (1+i) n ex \$100 in bank for 2 years at 10% = 100x(1+.1) 2 = 121 Present Value (PV) =Future Value (FV) / (1+i) n ex \$121 in 2 years at 10% is equivalent to \$100 today o The PV is the amount you could put in the bank today to grow to the FV in n years; i.e., we discount (remove) from the FV the interest that would have been earned over the n years.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern