CHAPTER 2: ASSET CLASSES & FINANCIAL INSTRUMENTS 1. In what ways is preferred stock like long-term debt? In what ways is it like equity? Note: The question is using the term equity to strictly mean common stock. Preferred stock is a type of equity. Preferred stock is like long-term debt in that it typically promises a fixed payment each year. In this way‚ it is a perpetuity. Preferred stock is also like long-term debt in that it does not give the holder voting rights in the firm. Preferred stock
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businesspeople‚ but the Federal Reserve System continuously adding more money into the economy. The article I have chosen to summarize examines the U.S. economy of today mainly the food and energy prices that have rose sharply since March 2003‚ which has prompted the Fed to concern itself with the onset of inflation. In reality‚ what triggers the rise in prices is an increase of money in circulation‚ which is a result of the actions performed by the Federal Reserve. The Federal Reserve‚ being the government
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Financial Markets and Institutions SEVENTH EDITION The Prentice Hall Series in Finance Alexander/Sharpe/Bailey Geisst Fundamentals of Investments Megginson Investment Banking in the Financial System Andersen Corporate Finance Theory Melvin Global Derivatives: A Strategic Risk Management Perspective Bear/Moldonado-Bear Gitman International Money and Finance Principles of Managerial Finance* Principles of Managerial Finance–– Brief Edition* Mishkin/Eakins
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1 Academic year 2014-2015 Chapter 11 Liquidity and Reserves Management: Strategies and Policies 2 This chapter has a lot of theory that is not written in the slides‚ reading the book is essential. 3 Intro Key 1. 2. 3. 4. 5. 6. Topics: Sources of Demand for and Supply of Liquidity Why Financial Firms Have Liquidity Problems Liquidity Management Strategies Estimating Liquidity Needs The Impact of Market Discipline Legal Reserves and Money Management 4 Intro A financial firm is considered
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planning on using Reserve Requirements. Be sure to address the following: 1. How Reserve Requirements affect the economy 2. How your action will affect economic growth 3. Why it is important to increase economic growth 4. Your rationale for the use of Reserve Requirements At the end of the game‚ you will be provided with this information to give to your instructor. Answer: If the economy is down because a NAFTA disputes has curtailed exports from economy‚ the Federal Reserve should lower
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able to maintain reserves that are only a fraction of the demand and savings deposits of their customers? Is your money safe in a bank? Why or why not? a. Banks only need to maintain reserves for checking accounts‚ allowing the banks to make savings accounts harder to withdraw from if the bank is running low on reserves. b. Because of the establishment of the Federal Deposit Insurance Corporation‚ money is safe in the bank for up to $250‚000 per account. 3. What is the Federal Funds Interest rate
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Economist‚ September 24‚ 2011‚ 24 pages. All sections of this report are required reading except “Commodities: Crowded out” and “Exporting jobs: Gurgaon grief”. 3. 4. 5. “Monetary Policy since the Onset of the Crisis‚” Ben S. Bernanke‚ Remarks at the Federal Reserve Bank of Kansas City Economic Symposium‚ August 31‚ 2012. “The Economic Outlook and Challenges to Monetary Policy‚” John C. Williams‚ Presentation to the City Club of San Francisco‚ September 24‚ 2012. Chapters 17 and 18‚ International Economics
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target when setting monetary policy? 4. If the Federal Reserve reduced its reserve requirement from 6.5 percent to 5 percent‚ this policy would most likely 5. If banks hold excess reserves whereas before they did not‚ the money multiplier 6. The process of money multiplier depends on 7. Quantitative easing refers to 8. If the Fed wants an easier monetary policy‚ it might 9. When the Fed raised the interest rates between 2004 and 2007‚ the Federal Reserve Answers If you expect interest
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Chapter 11 Liquidity and Reserves Management: Strategies and Policies 1. A(n) liquid asset is an asset which can be converted into cash easily‚ which has a relatively stable price and is reversible so that the seller can recover their original investment with little risk of loss. 2. When a financial institution sells assets to manage liquidity it faces opportunity costs. They lose the future earnings on those assets‚ they face transaction costs on those sales and the assets most easily
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day‚ as well as explain the role that the Spanish-American War played in America’s development of an empire‚ and to conclude I will explain the way in which the boom and bust of the “Roaring Twenties” followed by the Great Depression affected the federal government’s involvement in the national economy. The Progressive Era marked the end of the old order and required the creation of a new order appropriate for the new industrial age. Change was required and from the need for change came the progressives
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