Escolar Documentos
Profissional Documentos
Cultura Documentos
Chapter One
Introduction
McGraw-Hill /Irwin
McGraw-Hill /Irwin
McGraw-Hill /Irwin
Secondary
Secondary Markets
Markets
markets
markets where
where financial
financial instruments
instruments are
are traded
traded
among
among investors
investors (e.g.
(e.g. NYSE,
NYSE, NASDAQ)
NASDAQ)
McGraw-Hill /Irwin
Capital
Capital Markets
Markets
markets
markets that
that trade
trade debt
debt (bonds)
(bonds) and
and equity
equity
(stock)
(stock) instruments
instruments with
with maturities
maturities of
of more
more
than
than one
one year
year
McGraw-Hill /Irwin
1990
1990
Commercial
Commercialpaper
paper
U.S.
U.S.T-bills
T-bills
McGraw-Hill /Irwin
1995
1995
1999
1999
Fed
FedFunds
Fundsand
andRepo
Repo
Banker's
Banker'saccept.
accept.
1990
1990
Corp.
Corp.stocks
stocks
Comm/farm
Comm/farmmort.
mort.
Treas.
Treas.Sec.
Sec.
U.S.
U.S.gov
govowned
ownedagencies
agencies
Bank
Bankand
andconsumer
consumerloans
loans
McGraw-Hill /Irwin
1995
1995
1999
1999
Res.
Res.Mortgages
Mortgages
Corp.
Corp.bonds
bonds
St.
St.&&Loc.
Loc.Gov.
Gov.bonds
bonds
U.S.
U.S.gov
govsponsored
sponsoredagencies
agencies
Users of Funds
(Corporations)
Cash
McGraw-Hill /Irwin
Users of Funds
Suppliers of Funds
FI
(Asset
transformers)
Financial Claims
(Equity and debt securities)
McGraw-Hill /Irwin
Financial Claims
(Deposits and Insurance policies)
Types of FIs
Commercial
Commercial banks
banks
depository
depository institutions
institutions whose
whose major
major assets
assets are
are
loans
loans and
and major
major liabilities
liabilities are
are deposits
deposits
Thrifts
Thrifts
depository
depository institutions
institutions in
in the
the form
form of
of savings
savings
and
and loans,
loans, credit
credit unions
unions
Insurance
Insurance companies
companies
financial
financial institutions
institutions that
that protect
protectindividuals
individualsand
and
corporations
corporations from
fromadverse
adverse events
events
(continued)
McGraw-Hill /Irwin
Securities
Securities firms
firms and
and investment
investment banks
banks
financial
financial institutions
institutions that
that underwrite
underwrite securities
securities
and
and engage
engage in
in securities
securities brokerage
brokerageand
and trading
trading
Finance
Finance companies
companies
financial
financial institutions
institutions that
that make
make loans
loans to
to
individuals
individuals and
and businesses
businesses
Mutual
Mutual Funds
Funds
financial
financial institutions
institutions that
that pool
pool financial
financial
resources
resources and
and invest
invest in
in diversified
diversified portfolios
portfolios
Pension
Pension Funds
Funds
financial
financial institutions
institutions that
that offer
offer savings
savings plans
plans for
for
retirement
retirement
McGraw-Hill /Irwin
Liquidity
Liquidity and
and Price
Price Risk
Risk
provide
provide financial
financial claims
claims to
to savers
savers with
with superior
superior
liquidity
liquidity and
and lower
lowerprice
price risk
risk
(continued)
McGraw-Hill /Irwin
Transaction
Transaction Cost
Cost Services
Services
transaction
transaction costs
costs are
are reduced
reduced through
through
economies
economies of
of scale
scale
Maturity
Maturity Intermediation
Intermediation
greater
greater ability
ability to
to bear
bear risk
risk of
of mismatching
mismatching
maturities
maturities of
of assets
assets and
and liabilities
liabilities
Denomination
Denomination Intermediation
Intermediation
allow
allow small
small investors
investors to
to overcome
overcome constraints
constraints
imposed
imposed to
to buying
buying assets
assets imposed
imposed by
by large
large
minimum
minimumdenomination
denomination size
size
McGraw-Hill /Irwin
Credit
Credit Allocation
Allocation
often
often viewed
viewed as
as the
the major
major source
source of
of financing
financing
for
for aa particular
particular sector
sector of
of the
the economy
economy (e.g.
(e.g.
farming
farming and
and real
real estate)
estate)
(continued)
McGraw-Hill /Irwin
Payment
Payment Services
Services
efficiency
efficiency with
with which
which depository
depository institutions
institutions
provide
provide payment
payment services
services directly
directly benefits
benefits the
the
economy
economy
McGraw-Hill /Irwin
Interest
InterestRate
RateRisk
Risk
Foreign
ForeignExchange
ExchangeRisk
Risk
Market
MarketRisk
Risk
Credit
CreditRisk
Risk
Liquidity
LiquidityRisk
Risk
Off-Balance-Sheet
Off-Balance-SheetRisk
Risk
Technology
TechnologyRisk
Risk
Operation
OperationRisk
Risk
Country
Countryor
orSovereign
SovereignRisk
Risk
Insolvency
InsolvencyRisk
Risk
McGraw-Hill /Irwin
McGraw-Hill /Irwin