Slide 1–1. Part I Introduction Chapter One Why Study Financial Markets and Institutions?
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Transcript of Slide 1–1. Part I Introduction Chapter One Why Study Financial Markets and Institutions?
Slide 1–1
Part I
Introduction
Chapter One
Why Study Financial Markets and Institutions?
Slide 1–4
Why Study Financial Markets?
1. Channels funds from savers to investors, thereby promoting economic efficiency
2. Affects personal wealth and behavior of business firms
Slide 1–5
Bond Market and Interest Rates
Complete list of interest rateshttp://www.federalreserve.gov/releases
Figure 1-1: Interest Rates on Selected Bonds, 1950–2001
Slide 1–6
Stock Market
Figure 1-2: Stock Prices as Measured by the Dow Jones Industrial Average, 1950–2001
Slide 1–7
Foreign Exchange Market
Figure 1-3: Exchange Rate of the U.S. Dollar for a Basket of Foreign Currencies, 1970–2002
Slide 1–8
Why Study Financial Institutions?
1. Central Banks and the Conduct of Monetary Policy
2. Structure of the Financial System– Helps get funds from savers to investors
3. Banks and Other Financial Institutions
4. Financial Innovation
5. Managing Risk
Slide 1–9
How We Study Financial Markets and Institutions
• Basic Analytic Framework1. Simplified approach to the demand for assets
2. Concept of equilibrium
3. Basic supply and demand approach to understand behavior in financial markets
4. Search for profits
5. Transactions cost and asymmetric information approach to financial structure
6. Aggregate supply and demand analysis
Slide 1–10
How We Study Financial Markets and Institutions
• Features1. Case studies
2. Applications and Numerical Examples
3. Special Interest Boxes
4. Following the Financial News boxes
5. Reading the Wall Street Journal
6. Practicing Financial Institution Manager applications
Slide 1–11
Exploring the Web
• Web Exercise: Historical Relationship Between Long- and Short-Term Interest Rates
Exploring the Web
Exploring the Web
Exploring the Web