Money and capital markets : financial institutions and instruments in a global marketplace

목차 (Table of Contents)

• CONTENTS
• Part One The Global Financial System in Perspective
• Chapter One The Many Roles of the Financial System in the Global Economy = 1
• The Global Economy and the Financial System = 2
• Flows within the Global Economic System = 2
• The Role of Markets in the Global Economic System = 2
• Types of Markets = 3
• The Financial Markets and the Financial System : Channel for Savings and Investment = 4
• Functions Performed by the Global Financial System and the Financial Markets = 6
• Savings Function = 6
• Wealth Function = 6
• Liquidity Function = 8
• Credit Function = 8
• Payments Function = 8
• Risk Function = 9
• Policy Function = 9
• Types of Financial Markets within the Global Financial System = 10
• The Money Market versus the Capital Market = 10
• Divisions of the Money and Capital Markets = 12
• Open versus Negotiated Markets = 13
• Primary versus Secondary Markets = 13
• Spot versus Futures, Forward, and Option Markets = 14
• Factors Tying All Financial Markets Together = 17
• The Dynamic Financial System = 20
• The Plan of This Book = 20
• Study Questions = 22
• Problems = 22
• Selected References = 25
• Chapter Two Financial Assets, Money, and Financial Transactions in the Global Financial System = 26
• The Creation of Financial Assets = 27
• Characteristics of Financial Assets = 27
• Different Kinds of Financial Assets = 27
• The Creation Process for Financial Assets = 28
• Financial Assets and the Financial System = 30
• Lending and Borrowing in the Financial System = 33
• Money as a Financial Asset = 35
• What is Money? = 35
• The Functions of Money = 37
• The Evolution of Financial Transactions = 38
• Direct Finance = 38
• Semidirect Finance = 39
• Indirect Finance = 40
• Relative Size and Importance of Major Financial Institutions = 41
• Classification of Financial Institutions = 43
• Portfolio Decisions by Financial Intermediaries and Other Financial Institutions = 43
• Disintermediation of Funds = 44
• New Types of Disintermediation = 45
• Summary = 47
• Study Questions = 47
• Problems = 48
• Selected References = 49
• Chapter Three Sources of Information for Financial Decision Making in the Money and Capital Markets = 50
• Efficient Markets and Asymmetric Information = 51
• The Efficient Markets Hypothesis(EMH) = 51
• The Concept of Asymmetric information = 55
• Problems Informational Asymmetries Can Create : Lemons and Plums = 58
• Problems Asymmetries Can Create : The Problem of Adverse Selection = 59
• The Moral Hazard Problem = 60
• Asymmetry, Efficiency, and Real-World Markets = 61
• Possible Remedies for informational Asymmetries = 62
• Debt Security Prices and Yields = 63
• Stock Prices and Dividend Yields = 64
• Information on Security Issuers = 68
• General Economic and Financial Conditions = 71
• Social Accounting Data = 77
• National Income Accounts = 77
• The Flow of Funds Accounts = 77
• Summary = 89
• Study Questions = 89
• Problems = 90
• Selected References = 91
• Part Two The Management and Regulation of Financial Institutions
• Chapter Four The Commercial Banking Industry = 92
• The Structure of U. S. Commercial Banking = 93
• A Trend toward Consolidation = 93
• Branch Banking = 94
• Bank Holding Companies = 95
• International Banking = 95
• Bank Failures = 99
• Changing Technology = 99
• Portfolio Characteristics of Commercial Banks = 100
• Cash and Due from Banks(Primary Reserves) = 102
• Security Holdings and Secondary Reserves = 102
• Loans = 104
• Deposits = 105
• Nondeposit Sources of Funds = 106
• Equity Capital = 107
• Revenues and Expenses = 107
• Money Creation and Destruction by Banks = 109
• Reserve Requirements and Excess Reserves = 110
• The Creation of Money and Credit = 111
• Destruction of Deposits and Reserves = 113
• Implications of Money Creation and Destruction = 115
• Summary = 116
• Study Questions = 116
• Problems = 116
• Selected References = 118
• Chapter Five Nonbank Thrift Institutions : Savings and Loan Associations, Savings Banks, Credit Unions, and Money Market Funds = 119
• Savings and Loan Associations = 120
• Origins = 120
• How Funds Are Raised and Allocated = 121
• Trends in Revenues and Costs = 123
• Possible Remedies for the Industry's Problems = 128
• Savings Banks = 128
• Number and Distribution of Savings Banks = 129
• How Funds are Raised and Allocated = 129
• Current Trends and Future Problems = 130
• Credit Unions = 130
• Credit Union Membership = 132
• Size of Credit Unions = 132
• New Services Offered = 132
• A Strong Competitive Force = 135
• Money Market Funds = 135
• Summary = 142
• Study Questions = 143
• Problems = 143
• Selected References = 144
• Chapter Six Mutual Funds, Pension Funds, Insurance Companies, Finance Companies and Other Financial Institutions = 145
• Mutual Funds(or Investment Companies) = 146
• The Background of Investment Companies = 146
• Tax Status of the Industry = 148
• Open-End and Closed-End Investment Companies = 148
• Goals and Earnings of Investment Companies = 149
• Pension Funds = 150
• Growth of Pension Funds = 150
• Investment Strategies of Pension Funds = 153
• Pension Fund Assets = 154
• Factors Affecting the Future Growth of Pension Funds = 155
• Life Insurance Companies = 156
• The Insurance Principle = 157
• Investments of Life Insurance Companies = 157
• Sources of Life Insurance Company Funds = 161
• Structure and Growth of the Life Insurance Industry = 161
• New Services = 162
• Property-Casualty Insurance Companies = 163
• Makeup of the Property-Casualty(P／C) Insurance Industry = 163
• Changing Risk Patterns in Property／Liability Coverage = 166
• Investments by Property-Casualty(P／C) Companies = 169
• Sources of Income = 169
• Business Cycles, Inflation, and Competition = 170
• Finance Companies = 170
• Different Finance Companies for Different Purposes = 171
• Growth of Finance Companies = 173
• Methods of Industry Financing = 173
• Recent Changes in the Character of the Finance Company Industry = 173
• Other Financial Institutions = 174
• Trends Affecting All Financial Institutions Today = 175
• Summary = 176
• Study Questions = 177
• Problems = 177
• Selected References = 179
• Chapter Seven The Regulation of Financial Institutions = 180
• The Reasons behind the Regulation of Financial Institutions = 181
• Does Regulation Benefit or Harm Financial Institutions? = 182
• The Regulation of Commercial Banks = 184
• The Federal Reserve System = 184
• The Comptroller of the Currency = 184
• Federal Deposit Insurance Corporation = 186
• State Banking Commissions = 186
• Regulations Controlling the Geographic Expansion of Banks = 187
• Regulation of the Services Banks Can Offer = 191
• The Rise of Disclosure Laws in Banking = 193
• The Growing Importance of Capital Regulation in Banking = 193
• The Unfinished Agenda for Banking Regulation = 195
• The Regulation of Nonbank Thrift Institutions = 197
• Credit Unions = 197
• Savings and Loans = 198
• Savings Banks = 203
• Money Market Funds = 204
• The Regulation of Insurance Companies = 204
• The Regulation of Pension Funds = 204
• The Regulation of Finance Companies = 205
• The Regulation of Investment Companies = 206
• An Overview of Trends in the Regulation of Financial Institutions = 206
• Study Questions = 210
• Problems = 211
• Selected References = 211
• Part Three Interest Rates and Security Prices
• Chapter Eight Interest Rates in the Financial System = 213
• Functions of the Rate of Interest in the Economy = 214
• The Classical Theory of Interest Rates = 214
• Saving by Households = 215
• Saving by Business Firms = 215
• Saving by Government = 216
• The Demand for Investment Funds = 216
• The Equilibrium Rate of Interest in the Classical Theory of Interest = 219
• Limitations of the Classical Theory of Interest = 220
• The Liquidity Preference or Cash Balances Theory of Interest Rates = 223
• The Demand for Liquidity = 223
• The Supply of Money(Cash Balances) = 226
• The Equilibrium Rate of Interest in Liquidity Preference Theory = 227
• Limitations of the Liquidity Preference Theory = 227
• The Loanable Funds Theory of Interest = 228
• The Demand for Loanable Funds = 229
• Total Demand for Loanable Funds = 230
• The Supply of Loanable Funds = 230
• Total Supply of Loanable Funds = 232
• The Equilibrium Rate of Interest in the Loanable Funds Theory = 233
• The Rational Expectations Theory = 235
• Summary = 239
• Study Questions = 239
• Problems = 240
• Selected References = 242
• Chapter Nine Relationships between Interest Rates and Security Prices = 243
• Units of Measurement for Interest Rates and Security Prices = 243
• Definition of Interest Rates = 243
• Basis Points = 244
• Security Prices = 244
• Measures of the Rate of Return, or Yield, on a Loan or Security = 245
• Coupon Rate = 245
• Current Yield = 246
• Yield to Maturity = 246
• Holding-Period Yield = 247
• Calculating Yields to Maturity and Holding-Period Yields = 248
• Yield-Price Relationships = 251
• Interest Rates Charged by Institutional Lenders = 254
• The Simple Interest Method = 254
• Add-On Rate of Interest = 255
• Discount Method = 255
• Home Mortgage Interest Rate = 256
• Annual Percentage Rate(APR) = 257
• Compound Interest = 258
• The Annual Percentage Yield(APY) = 259
• Summary = 261
• Study Questions = 261
• Problems = 262
• Selected References = 263
• Chapter Ten Inflation, Yield Curves, and Duration = 264
• Inflation and Interest Rates = 265
• The Correlation between Inflation and Interest Rates = 265
• The Nominal and Real Interest Rates = 266
• The Fisher Effect = 266
• The Harrod-Keynes Effect of Inflation = 267
• Alternative Views on Inflation and Interest Rates = 268
• Inflation and Stock Prices = 273
• The Development of New Inflation-Adjusted Securities = 275
• The Maturity of a Loan = 278
• The Yield Curve and the Term Structure of Interest Rates = 278
• Types of Yield Curves = 278
• The Unbiased Expectations Hypothesis = 279
• The Role of Expectations in Shaping the Yield Curve = 281
• Relative Changes in Long-Term Interest Rates = 282
• Policy Implications of the Unbiased Expectations Hypothesis = 283
• The Liquidity Premium View of the Yield Curve = 283
• The Segmented-Markets or Hedging-Pressure Argument = 284
• Policy Implications of the Segmented-Markets Theory = 284
• The Preferred Habitat or Composite Theory of the Yield Curve = 285
• Research Evidence on Yield-Curve Theories = 286
• Uses of the Yield Curve = 288
• Duration : A Different Approach to Maturity = 290
• The Price Elasticity of a Debt Security = 290
• The Impact of Varying Coupon Rates = 291
• An Alternative Maturity Index for a Security : Duration = 291
• Uses of Duration = 293
• Limitations of Duration = 295
• Summary = 296
• Study Questions = 297
• Problems = 297
• Selected References = 299
• Chapter Eleven Marketability, Default Risk, Call Privileges, Prepayment Risk, Taxes, and Other Factors Affecting Interest Rates = 301
• Marketability = 302
• Liquidity = 302
• Default Risk and Interest Rates = 303
• The Premium for Default Risk = 303
• The Expected Rate of Return or Yield on a Risky Security = 304
• Anticipated Loss and Default Risk Premiums = 304
• Factors Influencing Default Risk Premiums = 305
• Inflation and Default Risk Premiums = 312
• Yield Curves for Risky Securities = 312
• The Rise and Fall of Junk Bonds = 312
• A Summary of the Default Risk-Interest Rate Relationship = 314
• Call Privileges and Call Risk = 314
• Calculating the Yields on Called Securities = 314
• Advantages and Disadvantages of the Call Privilege = 315
• The Call Premium and Interest Rate Expectations = 317
• Research Evidence = 318
• Effect of Coupon Rates on Call Risk = 318
• Prepayment Risk and the Interest Rates on Loan-Backed Securities = 319
• Taxation of Security Returns = 320
• Treatment of Capital Losses = 322
• Tax-Exempt Securities = 322
• Convertible Securities = 326
• The Structure of Interest Rates = 327
• Study Questions = 328
• Problems = 329
• Selected References = 330
• Chapter Twelve Interest Rate Forecasting and Hedging against Interest Rate Risk = 332
• The Influence of the Business Cycle in Shaping Interest Rates = 333
• Relative Movements in Short- and Long-Term Interest Rates and Security Prices over the Business Cycle = 334
• Seasonality in Interest Rates = 336
• Forecasting Interest Rates : Advantages and Problems = 337
• Advantages of Rate Forecasting = 337
• Problems in Forecasting Interest Rates = 337
• Approaches to Modern Interest Rate Forecasting = 338
• Money Supply Approaches = 338
• Inflation and the Fisher Effect = 339
• Econometric Models = 340
• Following the Forward Calendar of New Security Offerings = 341
• Market Expectations and Implied Rate Forecasting = 342
• The Consensus Forecast = 343
• Interest Rate Risk Hedging Strategies = 344
• Duration = 344
• Stripped Securities = 345
• GAP Management = 345
• Interest Rate Caps, Floors, and Collars = 347
• Loan Options = 347
• Interest Rate SWAPS = 347
• Summary = 353
• Study Questions = 354
• Problems = 354
• Selected References = 356
• Chapter Thirteen Financial Futures and Options Contracts = 358
• The Nature of Futures Trading = 358
• General Principles of Hedging = 359
• Opening and Closing a Hedge = 359
• Why Hedging Can Be Effective = 360
• Risk Selection through Hedging = 361
• Financial Futures = 362
• The Purpose of Trading in Financial Futures = 362
• Securities Used in Financial Futures Contracts = 362
• U. S. Treasury Bonds and Notes = 365
• U. S. Treasury Bills = 366
• Eurodollar Time Deposits = 366
• Other Money Market Futures Contracts = 367
• Municipal(State and Local Government) Bonds = 367
• New Foreign Bond Index Futures Contracts = 367
• Stock Index Futures = 367
• Types of Hedging in the Financial Futures Market = 368
• The Long(or Buying) Hedge = 369
• The Short(or Selling) Hedge = 370
• Cross Hedging = 371
• The Mechanics of Futures Trading = 372
• Payoff Diagrams for Long and Short Futures Contracts = 374
• Option Contracts on Financial Futures = 375
• Basic Types of Option Contracts = 375
• Option Contracts for Money Market and Capital Market Instruments = 376
• Uses of Options on Futures Contracts = 377
• Payoff Diagrams for Valuing Options = 379
• The Black-Scholes Model for Valuing Options = 383
• Traders Active in the Futures and Options Markets = 385
• Potential Benefits from the Futures and Options Markets = 385
• Summary = 389
• Study Questions = 390
• Problems = 390
• Selected References = 392
• Part Four The Money Market
• Chapter Fourteen Characteristics of the Money Market = 393
• Characteristics of the Money Market = 394
• The Need for a Money Market = 394
• Borrowers and Lenders in the Money Market = 395
• The Goals of Money Market Investors = 395
• Types of Investment Risk = 397
• Money Market Maturities = 399
• Depth and Breadth of the Money Market = 399
• Federal Funds versus Clearinghouse Funds = 400
• A Market for Large Borrowers and Lenders = 400
• The Volume of Money Market Securities = 402
• The Pattern of Interest Rates in the Money Market = 403
• Summary = 45
• Study Questions = 406
• Problems = 406
• Selected References = 407
• Chapter Fifteen Treasury Bills, Dealer Loans, and Repurchase Agreements = 408
• U. S. Treasury Bills = 409
• Volume of Bills Outstanding = 409
• Types of Treasury Bills = 410
• How Bills Are Sold = 410
• Results of a Recent Bill Auction = 411
• Calculating the Yield on Bills = 412
• Market Interest Rates on Treasury Bills = 414
• Investors in Treasury Bills = 417
• Primary Dealers, Dealer Loans, and Repurchase Agreements = 417
• Scandal Rocks the Market for Government Securities = 418
• Proposals for New Ways to Auction Government Securities = 419
• Governments Security Dealers' Reliance on Borrowed Funds = 421
• Demand Loans = 421
• Repurchase Agreements = 421
• Sources of Dealer Income = 424
• Dealer Positions in Securities = 425
• Changing Sources of Dealer Financing = 426
• Dealer Transactions and Government Security Brokers = 426
• Summary = 428
• Study Questions = 428
• Problems = 429
• Selected References = 429
• Chapter Sixteen Banks in the Money Market : Federal Funds, Negotiable CDs, and Loans from the Discount Window = 431
• Federal Funds = 433
• Nature of Federal Funds = 434
• Use of the Federal Funds Market to Meet Deposit Reserve Requirements = 433
• Mechanics of Federal Funds Trading = 435
• Volume of Borrowings in the Funds Market = 436
• Rates on Federal Funds = 437
• Federal Funds and Government Policy = 437
• Negotiable Certificates of Deposit = 439
• Growth of CDs = 439
• Terms Attached to CDs = 440
• Buyers of CDs = 442
• CDs in Liability Management = 443
• New Types of CDs = 443
• Loans from the Federal Reserve's Discount Window = 445
• Causes and Effects of Borrowing from the Discount Window = 446
• Collateral for Discount Window Loans = 447
• Restrictions on Federal Reserve Credit = 447
• The Federal Reserve's Discount Rate = 448
• Concluding Comment on Bank Activity in the Money Market = 450
• Study Questions = 451
• Problems = 452
• Selected References = 453
• Chapter Seventeen Corporations in the Money Market : Commercial Paper and Federal Agency Securities = 454
• Commercial Paper = 455
• What Is Commercial Paper? = 455
• Types of Commercial Paper = 455
• Recent Growth of Commercial Paper = 457
• Maturities and Rates of Return on Commercial Paper = 460
• Changing Yields on Paper Issues = 461
• Advantages of Issuing Commercial Paper = 461
• Possible Disadvantages from Issuing Commercial Paper = 462
• Principal Investors = 463
• Continuing Innovation in the Paper Market = 464
• Commercial Paper Ratings = 465
• Dealers in Paper = 466
• Federal Agency Securities = 466
• Types of Federal Credit Agencies = 467
• Growth of the Agency Market = 468
• Terms on Agency Securities = 470
• The Marketing of Agency Issues = 471
• Summary = 472
• Study Questions = 472
• Problems = 473
• Selected References = 474
• Chapter Eighteen International Money Market Instruments : Bankers' Acceptances and Eurocurrency Deposits = 475
• Bankers' Acceptances = 476
• Why Acceptances Are Used in International Trade = 476
• How Acceptances Arise = 477
• The Growth and Decline of Acceptance Financing = 478
• Acceptance Rates = 480
• Investors in Acceptances = 480
• Eurocurrency Deposits = 481
• What Is a Eurodollar? = 482
• The Creation of Eurocurrency Deposits = 483
• Eurocurrency Maturities and Risks = 485
• The Supply of Eurocurrency Deposits = 486
• Eurodollars in U. S. Domestic Bank Operations = 486
• Recent Innovations in the Eurocurrency Markets = 489
• Benefits and Costs of the Eurocurrency Markets = 489
• Summary = 490
• Study Questions = 491
• Problems = 491
• Selected References = 492
• Part Five Central Banking and Monetary Policy
• Chapter Nineteen Central Banks around the World and the Role of the Federal Reserve System = 493
• The Roles of Central Banks in the Economy and Financial System = 494
• Control of the Money Supply = 494
• Stabilizing the Money and Capital Markets = 495
• Lender of Last Resort = 495
• Maintaining and Improving the Payments Mechanism = 495
• The Goals and Channels of Central Banking = 496
• The Channels through Which Central Banks Work = 497
• The History of the Federal Reserve System - Central Bank of the United States = 498
• Problems in the Early U. S. Banking System = 500
• Creation of the Federal Reserve System = 502
• The Early Structure of the Federal Reserve System = 503
• Goals and Policy Tools of the Federal Reserve System = 503
• How the Fed Is Organized = 504
• Board of Governors of the Federal Reserve System = 505
• The Federal Open Market Committee and Manager of the System Open Market Account = 506
• The Federal Reserve Banks = 507
• The Member Banks of the Federal Reserve System = 508
• Roles of the Federal Reserve System Today = 511
• The Clearing and Collection of Checks and Other Means of Payment = 511
• Issuing Currency and Coin and Providing Other Services = 512
• Maintaining a Sound Banking and Financial System = 512
• Serving as the Federal Government's Fiscal Agent = 513
• Carrying Out Monetary Policy = 513
• Providing Information to the Public = 514
• Summary = 514
• Study Questions = 515
• Problems = 515
• Selected References = 516
• Chapter Twenty The Tools of Central Bank Monetary Policy = 517
• Reserves, Money, and Interest Rates - Targets of Central Bank Policy = 517
• The Composition of Reserves = 518
• The Deposit Multiplier = 519
• The Money Multiplier = 521
• General versus Selective Credit Controls = 522
• The General Credit Controls of the Fed = 523
• Reserve Requirements = 523
• Changes in the Federal Reserve's Discount Rate = 526
• Open Market Operations = 528
• Selective Credit Controls Used by the Fed = 537
• Moral Suasion by Central Bank Officials = 537
• Margin Requirements = 537
• Summary = 540
• Study Questions = 541
• Problems = 541
• Selected References = 542
• Chapter Twenty-One Indicators and Goals of Monetary Policy = 544
• Factors Influencing the Reserves of the Banking System = 545
• Actions of the Public Affecting Reserves = 545
• Operations of the Treasury and Foreign Investors Affecting Reserves = 546
• Federal Reserve Operations Affecting Reserves = 547
• The Heart of the Monetary Policy Process - Controlling Reserves to Achieve Desired Target Levels in Interest Rates and the Availability of Credit in the Economy = 547
• The Federal Reserve Statement = 547
• Factors Supplying Reserves = 548
• Factors Absorbing Reserves = 549
• Measures of the Money and Credit Supply = 549
• Money and Credit Supply Measures = 551
• Federal Reserve Control of Money Supply and Credit Growth = 552
• Achieving the Fed's Money Supply and Credit Growth Targets = 554
• Money Market Indicators and Interest Rate Targeting = 555
• The Federal Funds Rate = 555
• The Dangers of Interest Rate Targeting = 557
• The Federal Reserve and Economic Goals = 559
• The Goal of Controlling Inflation = 559
• The Goal of Full Employment = 560
• The Goal of Sustainable Economic Growth = 562
• Equilibrium in the U. S. Balance of Payments and Protecting the Dollar = 563
• What Policies Should We Pursue to Achieve National and International Economic Goals? = 564
• Monetarist View = 564
• The Credit Availability, or Neo-Keynesian, View = 565
• Supply-Side Economics = 567
• The Trade-Offs among Economic Goals = 568
• The Limitations of Monetary Policy = 569
• Study Questions = 569
• Problems = 570
• Selected References = 571
• Part Six The Roles Played by Governments within the Financial System
• Chapter Twenty-Two The Treasury in the Financial Markets = 572
• The Fiscal Policy Activities of the U. S. Treasury = 572
• Sources of Federal Government Funds = 573
• Federal Government Expenditures = 574
• Recent Tax and Expenditure Legislation = 575
• Effects of Government Borrowing on the Financial System and the Economy = 576
• Effects of the Retirement of Government Debt from a Budget Surplus on the Financial System and the Economy = 578
• Overall Impact of Government Borrowing and Spending = 581
• Management of the Federal Debt = 582
• The Size and Growth of the Public Debt = 583
• The Composition of the Public Debt = 585
• Marketable Public Debt = 585
• Nonmarketable Public Debt = 585
• Investors in U. S. Government Securities = 586
• Methods of Offering Treasury Securities = 587
• The Goals of Federal Debt Management = 590
• The Impact of Federal Debt Management on the Financial Markets and the Economy = 591
• Summary = 592
• Study Questions = 593
• Problems = 594
• Selected References = 595
• Chapter Twenty-Three State and Local Governments in the Financial Markets = 596
• Growth of State and Local Government Borrowing = 596
• Sources of Revenue for State and Local Governments = 598
• State and Local Governments = 599
• Motivations for State and Local Government Borrowing = 602
• Types of Securities Issued by State and Local Governments = 602
• Short-Term Securities = 603
• Long-Term Securities = 603
• Types of Revenue Bonds = 604
• Innovations in Municipal Securities = 605
• Key Features of Municipal Debt = 606
• Tax Exemption = 606
• Exemption Contributes to Market Volatility = 608
• Credit Ratings = 609
• Serialization = 612
• How Municipal Bonds Are Marketed = 613
• Problems in the Municipal Market = 614
• Problems and Proposals Regarding Tax Exemption = 614
• California's Proposition 13 and Taxpayer Resistance = 614
• The Outlook for State and Local Governments = 616
• Study Questions = 616
• Problems = 617
• Selected References = 618
• Part Seven The Consumer in the Financial Markets
• Chapter Twenty-Four Consumer Lending and Borrowing = 619
• Consumers as Lenders of Funds = 619
• Financial Assets Purchased by Consumers = 620
• The Growing Menu of Savings Instruments Available to Consumers Today = 621
• Consumers as Borrowers of Funds = 624
• Is Consumer Borrowing Excessive? = 624
• Categories of Consumer Borrowing = 626
• Home Equity Loans = 626
• Credit and Debit Cards = 627
• Credit Cards = 628
• Debit Cards = 629
• The Determinants of Consumer Borrowing = 629
• Consumer Lending Institutions = 631
• Commercial Banks = 631
• Finance Companies = 632
• Other Consumer Lending Institutions = 632
• Factors Considered in Making Consumer Loans = 632
• Financial Disclosure and Consumer Credit = 633
• Truth in Lending = 633
• Fair Credit Billing Act = 635
• Fair Credit Reporting Act = 635
• Consumer Leasing Act = 636
• Competitive Banking Equality Act = 636
• Truth in Savings Act = 636
• Credit Discrimination Laws = 637
• Community Reinvestment Act and Financial Institutions Reform, Recovery, and Enforcement Act = 637
• Equal Credit Opportunity Act = 637
• Fair Housing and Home Mortgage Disclosure Act = 637
• Consumer Bankruptcy Laws = 638
• Summary = 639
• Study Questions = 641
• Problems = 641
• Selected References = 643
• Chapter Twenty-Five The Residential Mortgage Market = 644
• Recent Trends in New Home Prices and the Terms of Mortgage Loans = 645
• The Structure of the Mortgage Market = 647
• Volume of Mortgage Loans = 647
• Residential versus Nonresidential Mortgage Loans = 647
• Mortgage-Lending Institutions = 649
• The Roles Played by Financial Institutions in the Mortgage Market = 651
• Savings and Loan Associations = 651
• Commercial Banks = 652
• Life Insurance Companies = 652
• Savings Banks = 652
• Mortgage Bankers = 653
• Government Activity = 653
• The Impact of the Great Depression on Government Involvement in the Mortgage Market = 653
• The Creation of Fannie Mae(FNMA) = 654
• The Creation of Ginnie Mae(GNMA) = 654
• The Federal Home Loan Mortgage Corporation(FHLMC) = 655
• Innovations in Mortgage Instruments = 656
• Variable-Rate and Other Adjustable Mortgages = 656
• Convertible Mortgages = 657
• Canadian Rollover and Other Renegotiated Mortgage Loans = 657
• Reverse-Annuity Mortgages = 657
• Graduated-Payment Mortgages = 657
• Epilogue on the Fixed-Rate Mortgage = 658
• Creative Financing Techniques = 658
• Second Mortgages = 658
• Home-Leasing Plans = 658
• Land-Leasing Plans and Property Exchanges = 659
• Refinancing Home Mortgages and Home Equity Loans = 659
• Summary = 660
• Study Questions = 660
• Problems = 661
• Selected References = 662
• Part Eight Businesses in the Financial Markets
• Chapter Twenty-Six Business Borrowing = 663
• Factors Affecting Business Activity in the Money and Capital Markets = 663
• Characteristics of Corporate Notes and Bonds = 665
• Principal Features of Corporate Notes and Bonds = 665
• Term Bonds versus Serial Bonds = 665
• Recent Trends in Original Maturities of Bonds = 665
• Call Privileges = 666
• Sinking Fund Provisions = 666
• Yields and Costs of Corporate Bonds = 666
• The Signals That Corporate Note and Bond Issues Send = 667
• The Most Common Types of Corporate Bonds = 668
• New Types of Corporate Notes and Bonds = 669
• Investors in Corporate Notes and Bonds = 671
• The Secondary Market for Corporate Bonds = 672
• The Marketing of Corporate Notes and Bonds = 673
• The Public Sale of Bonds = 673
• Private Placements of Corporate Bonds = 676
• The Volume of Borrowing in the Corporate Bond Market = 677
• Bank Loans to Business Firms = 679
• The Prime, or Base, Interest Rate = 680
• Commercial Mortgages = 681
• Summary = 682
• Study Questions = 683
• Problems = 684
• Selected References = 685
• Chapter Twenty-Seven Corporate Stock = 686
• Characteristics of Corporate Stock = 687
• Common Stock = 687
• Preferred Stock = 688
• Stock Market Investors = 689
• Is the Stock Market More Volatile Today? = 693
• Characteristics of the Corporate Stock Market = 693
• The Major Organized Exchanges = 694
• The Informal Over-the-Counter Market = 696
• The Third Market : Trading in Listed Securities off the Exchange = 697
• The Private Equity Market = 699
• The Market for Stock Options = 700
• Call Options = 700
• Puts = 700
• The Growth of Options Markets = 701
• The Rise of Program Trading : Portfolio Insurance and Stock Index Arbitraging = 701
• The Development of a Unified International Market for Stock = 702
• The National Market System = 702
• NASD and Automated Price Quotations = 705
• The Advent of Shelf Registration = 705
• Global Trading in Equities = 706
• The Development of ADRs = 707
• Remaining Barriers to Global Trading = 707
• Random Walk and Efficient Markets = 708
• The Efficient Markets Hypothesis = 709
• Research Evidence on the EMH = 709
• Summary of Findings = 709
• Summary = 710
• Study Questions = 710
• Problems = 711
• Selected References = 711
• Part Nine The International Financial System and the Future
• Chapter Twenty-Eight International Transactions and Currency Values = 713
• The Balance of Payments = 714
• The U. S. Balance of International Payments = 714
• The Current Account = 715
• The Capital Account = 718
• The Basic Balance = 719
• Official Reserve Transactions = 719
• Disequilibrium in the Balance of Payments = 719
• The Problem of Different Monetary Units in International Trade and Finance = 720
• The Gold Standard = 721
• The Gold Exchange Standard = 721
• The Modified Exchange Standard = 721
• Adoption of a New Managed Floating Currency Standard = 722
• Determining Foreign Currency Values in Today's Markets = 724
• Essential Features of the Foreign Exchange Market = 724
• Exchange Rate Quotations = 725
• Factors Affecting Foreign Exchange Rates = 726
• Supply and Demand for Foreign Exchange = 727
• The Forward Market for Currencies = 730
• Methods of Quoting Forward Exchange Rates = 730
• Functions of the Forward Exchange Market = 731
• Commercial Covering = 731
• Hedging an Investment Position = 732
• Speculation on Future Currency Prices = 732
• Covered Interest Arbitrage = 732
• The Principle of Interest Rate Parity = 733
• The Market for Foreign Currency Futures = 734
• Other Innovative Methods for Dealing with Currency Risk = 735
• Government Intervention in the Foreign Exchange Markets = 736
• Study Questions = 737
• Problems = 738
• Selected References = 739
• Chapter Twenty-Nine International Banking = 741
• The Scope of International Banking Activities = 742
• Multinational Banking Corporations = 742
• Types of Facilities Operated by Banks Abroad = 742
• Services Offered by International Banks = 743
• Issuing Letters of Credit = 743
• Buying and Selling Foreign Exchange(FOREX) = 744
• Issuing Bankers' Acceptances = 744
• Accepting Eurocurrency Deposits and Making Eurocurrency Loans = 744
• Marketing and Underwriting of Both Domestic and Eurocurrency Bonds, Notes, and Equity Shares = 744
• Securitizing Loans = 746
• Other Services Provided by International Banks = 747
• Foreign Banks in the United States = 747
• Recent Growth of Foreign Banks in the United States = 748
• Federal Regulation of Foreign Bank Activity = 748
• Regulation of the International Banking Activities of U. S. Banks = 750
• The Future of International Banking = 751
• The Risks of International Lending = 751
• Public Confidence and Bank Failures = 756
• The Spread of Deregulation : How Fast Should We Go? = 757
• Prospects and Issues for the New Century = 757
• Study Questions = 758
• Problems = 759
• Selected References = 759
• Chapter Thirty The Future of the Financial System = 761
• Social, Economic, and Demographic Forces and Trends Reshaping the Financial System = 762
• The Challenges and Opportunities Presented by Recent Trends = 765
• Dealing with Risk in the Financial System : Ensuring the Strength and Viability of Financial Institutions = 765
• The Effect of New Technology on the Design and Delivery of Financial Services = 769
• The Changing Mix of Financial Service Suppliers = 771
• The Shifting of Assets and Interest within the Financial System = 773
• Consolidation and Convergence Trends within the Financial System = 774
• A New Role for Public Policy in an Age of Financial Service Consolidation and Convergence = 776
• Management Coordination within Diversified Financial Institutions = 778
• Steps toward Better Management Coordination = 778
• The Future of Alternative Financial Service Distribution Systems = 779
• The Future of the Payments System = 780
• The Future Need for Regulation of Financial Institutions = 782
• Regulations That Could Grow = 784
• Summary and a Look Forward = 786
• Study Questions = 786
• Problems = 787
• Selected References = 787
• Cases
• Case 1 : Babes-N-Toyland = 790
• Case 2 : Bay Street Bankcorp = 794
• Case 3 : Deal's Computerland = 799
• Appendix : Present Value, Annuity, Compound Interest, and Annual Percentage Rate(APR) Tables = 803
• Money and Capital Markets Dictionary = 812
• Index = 828