Financial Markets and Institutions 9th Edition Madura Test Bank

1. Part 1 Introduction
2. Chapter 1 Why Study Financial Markets and Institutions?
3. Preview
4. Why Study Financial Markets?
5. Debt Markets and Interest Rates
6. The Stock Market
7. The Foreign Exchange Market
8. Why Study Financial Institutions?
9. Structure of the Financial System
10. Financial Crises
11. Central Banks and the Conduct of Monetary Policy
12. The International Financial System
13. Banks and Other Financial Institutions
14. Financial Innovation
15. Managing Risk in Financial Institutions
16. Applied Managerial Perspective
17. How We Will Study Financial Markets and Institutions
18. Exploring the Web
19. Collecting and Graphing Data
20. Web Exercise
21. Concluding Remarks
22. Summary
23. Key Terms
24. Questions
25. Quantitative Problems
26. Web Exercises
27. Working with Financial Market Data
28. Chapter 2 Overview of the Financial System
29. Preview
30. Function of Financial Markets
31. Structure of Financial Markets
32. Debt and Equity Markets
33. Primary and Secondary Markets
34. Exchanges and Over-the-Counter Markets
35. Money and Capital Markets
36. Internationalization of Financial Markets
37. International Bond Market, Eurobonds, and Eurocurrencies
38. World Stock Markets
39. Function of Financial Intermediaries: Indirect Finance
40. Transaction Costs
41. Risk Sharing
42. Asymmetric Information: Adverse Selection and Moral Hazard
43. Economies of Scope and Conflicts of Interest
44. Types of Financial Intermediaries
45. Depository Institutions
46. Commercial Banks
47. Savings and Loan Associations (S&Ls) and Mutual Savings Banks
48. Credit Unions
49. Contractual Savings Institutions
50. Life Insurance Companies
51. Fire and Casualty Insurance Companies
52. Pension Funds and Government Retirement Funds
53. Investment Intermediaries
54. Finance Companies
55. Mutual Funds
56. Money Market Mutual Funds
57. Hedge Funds
58. Investment Banks
59. Regulation of the Financial System
60. Increasing Information Available to Investors
61. Ensuring the Soundness of Financial Intermediaries
62. Restrictions on Entry
63. Disclosure
64. Restrictions on Assets and Activities
65. Deposit Insurance
66. Limits on Competition
67. Restrictions on Interest Rates
68. Financial Regulation Abroad
69. Summary
70. Key Terms
71. Questions
72. Web Exercises
73. The Financial System
74. Part 2 Fundamentals of Financial Markets
75. Chapter 3 What Do Interest Rates Mean and What Is Their Role in Valuation?
76. Preview
77. Measuring Interest Rates
78. Present Value
79. Four Types of Credit Market Instruments
80. Yield to Maturity
81. Simple Loan
82. Fixed-Payment Loan
83. Coupon Bond
84. Discount Bond
85. Summary
86. The Distinction Between Real and Nominal Interest Rates
87. The Distinction Between Interest Rates and Returns
88. Maturity and the Volatility of Bond Returns: Interest-Rate Risk
89. Reinvestment Risk
90. Summary
91. Calculating Duration
92. Duration and Interest-Rate Risk
93. Summary
94. Key Terms
95. Questions
96. Quantitative Problems
97. Web Exercises
98. Understanding Interest Rates
99. Chapter 4 Why Do Interest Rates Change?
100. Preview
101. Determinants of Asset Demand
102. Wealth
103. Expected Returns
104. Risk
105. Liquidity
106. Theory of Portfolio Choice
107. Supply and Demand in the Bond Market
108. Demand Curve
109. Supply Curve
110. Market Equilibrium
111. Supply-and-Demand Analysis
112. Changes in Equilibrium Interest Rates
113. Shifts in the Demand for Bonds
114. Wealth
115. Expected Returns
116. Risk
117. Liquidity
118. Shifts in the Supply of Bonds
119. Expected Profitability of Investment Opportunities
120. Expected Inflation
121. Government Budget
122. Summary
123. Key Terms
124. Questions
125. Quantitative Problems
126. Web Exercises
127. Interest Rates and Inflation
128. Web Appendices
129. Chapter 5 How Do Risk and Term Structure Affect Interest Rates?
130. Preview
131. Risk Structure of Interest Rates
132. Default Risk
133. Liquidity
134. Income Tax Considerations
135. Example 5.1 Income Tax Considerations
136. Summary
137. Term Structure of Interest Rates
138. Expectations Theory
139. Example 5.2 Expectations Theory
140. Example 5.3 Expectations Theory
141. Market Segmentation Theory
142. Liquidity Premium Theory
143. Example 5.4 Liquidity Premium Theory
144. Evidence on the Term Structure
145. Summary
146. Summary
147. Key Terms
148. Questions
149. Quantitative Problems
150. Web Exercises
151. The Risk and Term Structures of Interest Rates
152. Chapter 6 Are Financial Markets Efficient?
153. Preview
154. The Efficient Market Hypothesis
155. Rationale Behind the Hypothesis
156. Evidence on the Efficient Market Hypothesis
157. Evidence in Favor of Market Efficiency
158. Performance of Investment Analysts and Mutual Funds
159. Do Stock Prices Reflect Publicly Available Information?
160. Random-Walk Behavior of Stock Prices
161. Technical Analysis
162. Evidence Against Market Efficiency
163. Small-Firm Effect
164. January Effect
165. Market Overreaction
166. Excessive Volatility
167. Mean Reversion
168. New Information Is Not Always Immediately Incorporated into Stock Prices
169. Overview of the Evidence on the Efficient Market Hypothesis
170. Why the Efficient Market Hypothesis Does Not Imply That Financial Markets Are Efficient
171. Behavioral Finance
172. Summary
173. Key Terms
174. Questions
175. Quantitative Problems
176. Web Exercises
177. The Efficient Market Hypothesis
178. Part 3 Fundamentals of Financial Institutions
179. Chapter 7 Why Do Financial Institutions Exist?
180. Preview
181. Basic Facts About Financial Structure Throughout The World
182. Transaction Costs
183. How Transaction Costs Influence Financial Structure
184. How Financial Intermediaries Reduce Transaction Costs
185. Economies of Scale
186. Expertise
187. Asymmetric Information: Adverse Selection and Moral Hazard
188. The Lemons Problem: How Adverse Selection Influences Financial Structure
189. Lemons in the Stock and Bond Markets
190. Tools to Help Solve Adverse Selection Problems
191. Private Production and Sale of Information
192. Government Regulation to Increase Information
193. Financial Intermediation
194. Collateral and Net Worth
195. Summary
196. How Moral Hazard Affects the Choice Between Debt and Equity Contracts
197. Moral Hazard in Equity Contracts: The Principal–Agent Problem
198. Tools to Help Solve the Principal–Agent Problem
199. Production of Information: Monitoring
200. Government Regulation to Increase Information
201. Financial Intermediation
202. Debt Contracts
203. How Moral Hazard Influences Financial Structure in Debt Markets
204. Tools to Help Solve Moral Hazard in Debt Contracts
205. Net Worth and Collateral
206. Monitoring and Enforcement of Restrictive Covenants
207. Financial Intermediation
208. Summary
209. Conflicts of Interest
210. What Are Conflicts of Interest and Why Do We Care?
211. Why Do Conflicts of Interest Arise?
212. Underwriting and Research in Investment Banking
213. Auditing and Consulting in Accounting Firms
214. Credit Assessment and Consulting in Credit-Rating Agencies
215. What Has Been Done to Remedy Conflicts of Interest?
216. Sarbanes-Oxley Act of 2002
217. Global Legal Settlement of 2002
218. Summary
219. Key Terms
220. Questions
221. Quantitative Problems
222. Web Exercises
223. Why Do Financial Institutions Exist?
224. Chapter 8 Why Do Financial Crises Occur and Why Are They So Damaging to the Economy?
225. Preview
226. What is a Financial Crisis?
227. Agency Theory and the Definition of a Financial Crisis
228. Dynamics of Financial Crises
229. Stage One: Initial Phase
230. Credit Boom and Bust
231. Asset-Price Boom and Bust
232. Increase in Uncertainty
233. Stage Two: Banking Crisis
234. Stage Three: Debt Deflation
235. Stock Market Crash
236. Bank Panics
237. Continuing Decline in Stock Prices
238. Debt Deflation
239. International Dimensions
240. Causes of the 2007–2009 Financial Crisis
241. Financial Innovation in the Mortgage Markets
242. Agency Problems in the Mortgage Markets
243. Asymmetric Information and Credit-Rating Services
244. Effects of the 2007–2009 Financial Crisis
245. Residential Housing Prices: Boom and Bust
246. Deterioration of Financial Institutions’ Balance Sheets
247. Run on the Shadow Banking System
248. Global Financial Markets
249. Failure of High-Profile Firms
250. Height of the 2007–2009 Financial Crisis
251. Summary
252. Key Terms
253. Questions
254. Web Exercises
255. Web References
256. Part 4 Central Banking and the Conduct of Monetary Policy
257. Chapter 9 Central Banks and the Federal Reserve System
258. Preview
259. Origins of the Federal Reserve System
260. Structure of the Federal Reserve System
261. Federal Reserve Banks
262. Member Banks
263. Board of Governors of the Federal Reserve System
264. Federal Open Market Committee (FOMC)
265. Why the Chair of the Board of Governors Really Runs the Show
266. How Independent Is the Fed?
267. Should the Fed Be Independent?
268. The Case for Independence
269. The Case Against Independence
270. Central Bank Independence and Macroeconomic Performance Throughout the World
271. Explaining Central Bank Behavior
272. Structure and Independence of the European Central Bank
273. Differences Between the European System of Central Banks and the Federal Reserve System
274. Governing Council
275. How Independent Is the ECB?
276. Structure and Independence of Other Foreign Central Banks
277. Bank of Canada
278. Bank of England
279. Bank of Japan
280. The Trend Toward Greater Independence
281. Summary
282. Key Terms
283. Questions and Problems
284. Web Exercises
285. Structures of the Federal Reserve System and the European System of Central Banks
286. Chapter 10 Conduct of Monetary Policy
287. Preview
288. How Fed Actions Affect Reserves in the Banking System
289. Open Market Operations
290. Discount Lending
291. The Market for Reserves and the Federal Funds Rate
292. Demand and Supply in the Market for Reserves
293. Demand Curve
294. Supply Curve
295. Market Equilibrium
296. How Changes in the Tools of Monetary Policy Affect the Federal Funds Rate
297. Open Market Operations
298. Discount Lending
299. Reserve Requirements
300. Interest on Reserves
301. Conventional Monetary Policy Tools
302. Open Market Operations
303. Discount Policy and the Lender of Last Resort
304. Operation of the Discount Window
305. Lender of Last Resort
306. Reserve Requirements
307. Interest on Reserves
308. Nonconventional Monetary Policy Tools and Quantitative Easing
309. Liquidity Provision
310. Large-Scale Asset Purchases
311. Quantitative Easing Versus Credit Easing
312. Forward Guidance
313. Negative Interest Rates on Banks’ Deposits
314. Monetary Policy Tools of the European Central Bank
315. Open Market Operations
316. Lending to Banks
317. Interest on Reserves
318. Reserve Requirements
319. The Price Stability Goal and the Nominal Anchor
320. The Role of a Nominal Anchor
321. The Time-Inconsistency Problem
322. Other Goals of Monetary Policy
323. High Employment and Output Stability
324. Economic Growth
325. Stability of Financial Markets
326. Interest-Rate Stability
327. Stability in Foreign Exchange Markets
328. Should Price Stability Be the Primary Goal of Monetary Policy?
329. Hierarchical vs. Dual Mandates
330. Price Stability as the Primary, Long-Run Goal of Monetary Policy
331. Inflation Targeting
332. Advantages of Inflation Targeting
333. Disadvantages of Inflation Targeting
334. Delayed Signaling
335. Too Much Rigidity
336. Potential for Increased Output Fluctuations
337. Low Economic Growth
338. Should Central Banks Respond to Asset-Price Bubbles? Lessons from the Global Financial Crisis
339. Two Types of Asset-Price Bubbles
340. Credit-Driven Bubbles
341. Bubbles Driven Solely by Irrational Exuberance
342. The Debate over Whether Central Banks Should Try to Pop Bubbles
343. Con: Why Central Banks Should Not Try to Pop Bubbles
344. Pro: Why Central Banks Should Try to Pop Bubbles
345. Macroprudential Policies
346. Monetary Policy
347. Summary
348. Key Terms
349. Questions
350. Quantitative Problems
351. Web Exercises
352. Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics
353. Part 5 Financial Markets
354. Chapter 11 The Money Markets
355. Preview
356. The Money Markets Defined
357. Why Do We Need the Money Markets?
358. Money Market Cost Advantages
359. The Purpose of the Money Markets
360. Who Participates in the Money Markets?
361. U.S. Treasury Department
362. Federal Reserve System
363. Commercial Banks
364. Businesses
365. Investment and Securities Firms
366. Investment Companies
367. Finance Companies
368. Insurance Companies
369. Pension Funds
370. Individuals
371. Money Market Instruments
372. Treasury Bills
373. Solution
374. Risk
375. Treasury Bill Auctions
376. Treasury Bill Interest Rates
377. Federal Funds
378. Purpose of Fed Funds
379. Terms for Fed Funds
380. Federal Funds Interest Rates
381. Repurchase Agreements
382. The Use of Repurchase Agreements
383. Interest Rate on Repos
384. Negotiable Certificates of Deposit
385. Terms of Negotiable Certificates of Deposit
386. History of the CD
387. Interest Rate on CDs
388. Commercial Paper
389. Terms and Issuance
390. History of Commercial Paper
391. Market for Commercial Paper
392. The Role of Asset-Backed Commercial Paper in the Financial Crisis
393. Banker’s Acceptances
394. Eurodollars
395. London Interbank Market
396. Eurodollar Certificates of Deposit
397. Other Eurocurrencies
398. Comparing Money Market Securities
399. Interest Rates
400. Liquidity
401. How Money Market Securities Are Valued
402. Summary
403. Key Terms
404. Questions
405. Quantitative Problems
406. Web Exercises
407. The Money Markets
408. Chapter 12 The Bond Market
409. Preview
410. Purpose of the Capital Market
411. Capital Market Participants
412. Capital Market Trading
413. Types of Bonds
414. Treasury Notes and Bonds
415. Treasury Bond Interest Rates
416. Treasury Inflation-Protected Securities (TIPS)
417. Treasury STRIPS
418. Agency Bonds
419. Municipal Bonds
420. Solution
421. Risk in the Municipal Bond Market
422. Corporate Bonds
423. Characteristics of Corporate Bonds
424. Restrictive Covenants
425. Call Provisions
426. Conversion
427. Types of Corporate Bonds
428. Secured Bonds
429. Unsecured Bonds
430. Junk Bonds
431. Financial Guarantees for Bonds
432. Oversight of the Bond Markets
433. Current Yield Calculation
434. Current Yield
435. Solution
436. Finding the Value of Coupon Bonds
437. Finding the Price of Semiannual Bonds
438. Solution
439. Solution: Equation
440. Solution: Financial Calculator
441. Investing in Bonds
442. Summary
443. Key Terms
444. Questions
445. Quantitative Problems
446. Web Exercise
447. The Bond Market
448. Chapter 13 The Stock Market
449. Preview
450. Investing in Stocks
451. Common Stock vs. Preferred Stock
452. How Stocks Are Sold
453. Organized Securities Exchanges
454. Over-the-Counter Markets
455. Organized vs. Over-the-Counter Trading
456. Alternative Trading Systems (ATSs) and Multilateral Trading Facilities (MTFs)
457. Exchange Traded Funds
458. Computing the Price of Common Stock
459. The One-Period Valuation Model
460. Solution
461. The Generalized Dividend Valuation Model
462. The Gordon Growth Model
463. Solution
464. Price Earnings Valuation Method
465. Solution
466. How the Market Sets Security Prices
467. Errors in Valuation
468. Problems with Estimating Growth
469. Problems with Estimating Risk
470. Problems with Forecasting Dividends
471. Stock Market Indexes
472. Buying Foreign Stocks
473. Regulation of the Stock Market
474. The Securities and Exchange Commission
475. Summary
476. Key Terms
477. Questions
478. Quantitative Problems
479. Web Exercises
480. The Stock Market
481. Chapter 14 The Mortgage Markets
482. Preview
483. What are Mortgages?
484. Characteristics of the Residential Mortgage
485. Mortgage Interest Rates
486. Loan Terms
487. Collateral
488. Down Payments
489. Private Mortgage Insurance
490. Borrower Qualification
491. Mortgage Loan Amortization
492. Types of Mortgage Loans
493. Insured and Conventional Mortgages
494. Fixed-and Adjustable-Rate Mortgages
495. Other Types of Mortgages
496. Graduated-Payment Mortgages (GPMs)
497. Growing-Equity Mortgages (GEMs)
498. Second Mortgages (Piggyback)
499. Reverse Annuity Mortgages (RAMs)
500. Mortgage-Lending Institutions
501. Loan Servicing
502. Secondary Mortgage Market
503. Securitization of Mortgages
504. What is a Mortgage-Backed Security?
505. Types of Pass-Through Securities
506. Government National Mortgage Association (GNMA) Pass-Throughs
507. Federal Home Loan Mortgage Corporation (FHLMC) Pass-Throughs
508. Private Pass-Throughs (PIPs)
509. Subprime Mortgages and CDOs
510. The Real Estate Bubble
511. Summary
512. Key Terms
513. Questions
514. Quantitative Problems
515. Web Exercises
516. The Mortgage Markets
517. Chapter 15 The Foreign Exchange Market
518. Preview
519. Foreign Exchange Market
520. What Are Foreign Exchange Rates?
521. Why Are Exchange Rates Important?
522. How Is Foreign Exchange Traded?
523. Exchange Rates in the Long Run
524. Law of One Price
525. Solution
526. Theory of Purchasing Power Parity
527. Why the Theory of Purchasing Power Parity Cannot Fully Explain Exchange Rates
528. Factors That Affect Exchange Rates in the Long Run
529. Relative Price Levels
530. Trade Barriers
531. Preferences for Domestic Versus Foreign Goods
532. Productivity
533. Exchange Rates in the Short Run: A Supply and Demand Analysis
534. Supply Curve for Domestic Assets
535. Demand Curve for Domestic Assets
536. Equilibrium in the Foreign Exchange Market
537. Explaining Changes in Exchange Rates
538. Shifts in the Demand for Domestic Assets
539. Domestic Interest Rate, iD
540. Foreign Interest Rate, i F
541. Changes in the Expected Future Exchange Rate, Eet+1
542. Recap: Factors That Change the Exchange Rate
543. Summary
544. Key Terms
545. Questions
546. Predicting the Future
547. Quantitative Problems
548. Web Exercises
549. The Foreign Exchange Market
550. Appendix to Chapter 15 The Interest Parity Condition
551. Comparing Expected Returns on Domestic and Foreign Assets
552. Interest Parity Condition
553. Solution
554. Chapter 16 The International Financial System
555. Preview
556. Intervention in the Foreign Exchange Market
557. Foreign Exchange Intervention and Reserves in the Banking System
558. Unsterilized Intervention
559. Sterilized Intervention
560. Balance of Payments
561. Exchange Rate Regimes in the International Financial System
562. Fixed Exchange Rate Regimes
563. How a Fixed Exchange Rate Regime Works
564. Devaluation and Revaluation
565. Perfect Capital Mobility
566. The Policy Trilemma
567. Monetary Unions
568. Currency Boards and Dollarization
569. Speculative Attacks
570. Managed Float
571. Capital Controls
572. Controls on Capital Outflows
573. Controls on Capital Inflows
574. The Role of the IMF
575. Should the IMF Be an International Lender of Last Resort?
576. Summary
577. Key Terms
578. Questions
579. Quantitative Problems
580. Web Exercise
581. The International Financial System
582. Part 6 The Financial Institutions Industry
583. Chapter 17 Banking and the Management of Financial Institutions
584. Preview
585. The Bank Balance Sheet
586. Liabilities
587. Checkable Deposits
588. Nontransaction Deposits
589. Borrowings
590. Bank Capital
591. Assets
592. Reserves
593. Cash Items in Process of Collection
594. Deposits at Other Banks
595. Securities
596. Loans
597. Other Assets
598. Basic Banking
599. General Principles of Bank Management
600. Liquidity Management and the Role of Reserves
601. Asset Management
602. Liability Management
603. Capital Adequacy Management
604. How Bank Capital Helps Prevent Bank Failure
605. How the Amount of Bank Capital Affects Returns to Equity Holders
606. Trade-off Between Safety and Returns to Equity Holders
607. Bank Capital Requirements
608. Off-Balance-Sheet Activities
609. Loan Sales
610. Generation of Fee Income
611. Trading Activities and Risk Management Techniques
612. Measuring Bank Performance
613. Bank’s Income Statement
614. Operating Income
615. Operating Expenses
616. Income
617. Measures of Bank Performance
618. Recent Trends in Bank Performance Measures
619. Summary
620. Key Terms
621. Questions
622. Quantitative Problems
623. Web Exercises
624. Banking and the Management of Financial Institutions
625. Chapter 18 Financial Regulation
626. Preview
627. Asymmetric Information as a Rationale for Financial Regulation
628. Government Safety Net
629. Bank Panics and the Need for Deposit Insurance
630. Other Forms of the Government Safety Net
631. Moral Hazard and the Government Safety Net
632. Adverse Selection and the Government Safety Net
633. Too Big to Fail
634. Financial Consolidation and the Government Safety Net
635. Types of Financial Regulation
636. Restrictions on Asset Holdings
637. Capital Requirements
638. Prompt Corrective Action
639. Financial Supervision: Chartering and Examination
640. Assessment of Risk Management
641. Disclosure Requirements
642. Consumer Protection
643. Restrictions on Competition
644. Macroprudential Versus Microprudential Supervision
645. Summary
646. Banking Crises Throughout the World in Recent Years
647. “Déjà Vu All Over Again”
648. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010
649. Dodd-Frank
650. Consumer Protection
651. Resolution Authority
652. Systemic Risk Regulation
653. Volcker Rule
654. Derivatives
655. Too-Big-to-Fail and Future Regulation
656. What Can Be Done About the Too-Big-to-Fail Problem?
657. Break Up Large, Systemically Important Financial Institutions
658. Higher Capital Requirements
659. Leave It to Dodd-Frank
660. Other Issues for Future Regulation
661. Compensation in the Financial Services Industry
662. Government-Sponsored Enterprises (GSEs)
663. Credit-Rating Agencies
664. The Danger of Overregulation
665. Summary
666. Key Terms
667. Questions
668. Quantitative Problems
669. Web Exercises
670. Banking Regulation
671. Web Appendix
672. Chapter 19 Banking Industry: Structure and Competition
673. Preview
674. Historical Development of the Banking System
675. Multiple Regulatory Agencies
676. Financial Innovation and the Growth of the Shadow Banking System
677. Responses to Changes in Demand Conditions: Interest Rate Volatility
678. Adjustable-Rate Mortgages
679. Financial Derivatives
680. Responses to Changes in Supply Conditions: Information Technology
681. Bank Credit and Debit Cards
682. Electronic Banking
683. Electronic Payment
684. E-Money
685. Junk Bonds
686. Commercial Paper Market
687. Securitization and the Shadow Banking System
688. How the Shadow Banking System Works
689. Subprime Mortgage Market
690. Avoidance of Existing Regulations
691. Money Market Mutual Funds
692. Sweep Accounts
693. Financial Innovation and the Decline of Traditional Banking
694. Decline in Cost Advantages in Acquiring Funds (Liabilities)
695. Decline in Income Advantages on Uses of Funds (Assets)
696. Banks’ Responses
697. Decline of Traditional Banking in Other Industrialized Countries
698. Structure of the U.S. Banking Industry
699. Restrictions on Branching
700. Response to Branching Restrictions
701. Bank Holding Companies
702. Automated Teller Machines
703. Bank Consolidation and Nationwide Banking
704. The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994
705. What Will the Structure of the U.S. Banking Industry Look Like in the Future?
706. Are Bank Consolidation and Nationwide Banking Good Things?
707. Separation of the Banking and Other Financial Service Industries
708. Erosion of Glass-Steagall
709. The Gramm-Leach-Bliley Financial Services Modernization Act of 1999: Repeal of Glass-Steagall
710. Implications for Financial Consolidation
711. Separation of Banking and Other Financial Services Industries Throughout the World
712. Thrift Industry
713. Savings and Loan Associations
714. Mutual Savings Banks
715. Credit Unions
716. International Banking
717. Eurodollar Market
718. Structure of U.S. Banking Overseas
719. Foreign Banks in the United States
720. Summary
721. Key Terms
722. Questions
723. Web Exercises
724. Banking Industry: Structure and Competition
725. Chapter 20 The Mutual Fund Industry
726. Preview
727. The Growth of Mutual Funds
728. The First Mutual Funds
729. Benefits of Mutual Funds
730. Ownership of Mutual Funds
731. Mutual Fund Structure
732. Open-Versus Closed-End Funds
733. Organizational Structure
734. Investment Objective Classes
735. Equity Funds
736. Bond Funds
737. Hybrid Funds
738. Money Market Funds
739. Index Funds
740. Fee Structure of Investment Funds
741. Regulation of Mutual Funds
742. Hedge Funds
743. Conflicts of Interest in the Mutual Fund Industry
744. Sources of Conflicts of Interest
745. Mutual Fund Abuses
746. Government Response to Abuses
747. Summary
748. Key Terms
749. Questions
750. Quantitative Problems
751. Web Exercises
752. Investment Banks, Brokerage Firms, and Mutual Funds
753. Chapter 21 Insurance Companies and Pension Funds
754. Preview
755. Insurance Companies
756. Fundamentals of Insurance
757. Adverse Selection and Moral Hazard in Insurance
758. Selling Insurance
759. Growth and Organization of Insurance Companies
760. Types of Insurance
761. Life Insurance
762. Term Life
763. Whole Life
764. Universal Life
765. Annuities
766. Assets and Liabilities of Life Insurance Companies
767. Health Insurance
768. Property and Casualty Insurance
769. Property and Casualty Insurance Today
770. Reinsurance
771. Terrorism Risk Insurance Act of 2002
772. Insurance Regulation
773. Credit Default Swaps
774. Monoline Insurance
775. Pensions
776. Types of Pensions
777. Defined-Benefit Pension Plans
778. Defined-Contribution Pension Plans
779. Private and Public Pension Plans
780. Regulation of Pension Plans
781. Employee Retirement Income Security Act
782. Individual Retirement Plans
783. The Future of Pension Funds
784. Summary
785. Key Terms
786. Questions
787. Quantitative Problems
788. Web Exercises
789. Insurance Companies and Pension Funds
790. Chapter 22 Investment Banks, Security Brokers and Dealers, and Venture Capital Firms
791. Preview
792. Investment Banks
793. Background
794. Underwriting Stocks and Bonds
795. Giving Advice
796. Filing Documents
797. Underwriting
798. Best Efforts
799. Private Placements
800. Equity Sales
801. Mergers and Acquisitions
802. Securities Brokers and Dealers
803. Brokerage Services
804. Securities Orders
805. Other Services
806. Full-Service vs. Discount Brokers
807. Securities Dealers
808. Regulation of Securities Firms
809. Relationship Between Securities Firms and Commercial Banks
810. Private Equity Investment
811. Venture Capital Firms
812. Description of Industry
813. Venture Capitalists Reduce Asymmetric Information
814. Origins of Venture Capital
815. Structure of Venture Capital Firms
816. The Life of a Deal
817. Fundraising
818. Investing
819. Exiting
820. Venture Fund Profitability
821. Private Equity Buyouts
822. Advantages to Private Equity Buyouts
823. Life Cycle of the Private Equity Buyout
824. Summary
825. Key Terms
826. Questions
827. Quantitative Problems
828. Web Exercises
829. Investment Banks, Security Brokers and Dealers, and Venture Capital Firms
830. Part 7 The Management of Financial Institutions
831. Chapter 23 Risk Management in Financial Institutions
832. Preview
833. Managing Credit Risk
834. Screening and Monitoring
835. Screening
836. Specialization in Lending
837. Monitoring and Enforcement of Restrictive Covenants
838. Long-Term Customer Relationships
839. Loan Commitments
840. Collateral
841. Compensating Balances
842. Credit Rationing
843. Managing Interest-Rate Risk
844. Income Gap Analysis
845. Solution
846. Solution
847. Duration Gap Analysis
848. Solution
849. Solution
850. Solution
851. Example of a Nonbanking Financial Institution
852. Some Problems with Income Gap and Duration Gap Analyses
853. Summary
854. Key Terms
855. Questions
856. Quantitative Problems
857. Web Exercises
858. Risk Management in Financial Institutions
859. Chapter 24 Hedging with Financial Derivatives
860. Preview
861. Hedging
862. Forward Markets
863. Interest-Rate Forward Contracts
864. Pros and Cons of Forward Contracts
865. Financial Futures Markets
866. Financial Futures Contracts
867. Organization of Trading in Financial Futures Markets
868. Globalization of Financial Futures Markets
869. Explaining the Success of Futures Markets
870. Stock Index Futures
871. Stock Index Futures Contracts
872. Options
873. Option Contracts
874. Profits and Losses on Option and Futures Contracts
875. Factors Affecting the Prices of Option Premiums
876. Summary
877. Interest-Rate Swaps
878. Interest-Rate Swap Contracts
879. Advantages of Interest-Rate Swaps
880. Disadvantages of Interest-Rate Swaps
881. Financial Intermediaries in Interest-Rate Swaps
882. Credit Derivatives
883. Credit Options
884. Credit Swaps
885. Credit-Linked Notes
886. Summary
887. Key Terms
888. Questions
889. Quantitative Problems
890. Web Exercise
891. Hedging with Financial Derivatives
892. Web Appendices
893. Glossary
894. Index

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