Securities Operations

Securities Operations Investment Banking Services n     Investment banking firms (IBFs) assist in raising capital for corporations and state and municipal governments n     IBF’s serve both financing entities and investors: l      Serve as an intermediary buying securities (promise to pay) from ...

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Commercial Bank Operations

Commercial Bank Operations Bank Participation in Financial Conglomerates n     Benefits of diversified services to individuals and firms l      Individuals can obtain all their financial services at a single financial conglomerate u   Deposits u   Loans u   Investing (brokerage) u   Insurance l      ...

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Market Microstructure and Strategies

Market Microstructure and Strategies Stock Market Transactions n     Market order to buy/sell at the best possible price n     Limit order is a market order with a specific price maximum or minimum n     Stop-loss order Margin Trading n     Federal Reserve sets ...

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Residential Mortgage Characteristics

Residential Mortgage Characteristics l      Federal insurance guarantees repayment in the event of borrower default l      Limits on amounts, borrower requirements l      Borrower pays insurance premiums l      Conventional mortgages can also be privately insured Residential Mortgage Characteristics n     Fixed rate loans ...

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Residential Mortgage Characteristics

Residential Mortgage Characteristics l      Federal insurance guarantees repayment in the event of borrower default l      Limits on amounts, borrower requirements l      Borrower pays insurance premiums l      Conventional mortgages can also be privately insured Residential Mortgage Characteristics n     Fixed rate loans ...

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Background on Bonds

Background on Bonds n     Bonds represent long-term debt securities l      Contractual l      Promise to pay future cash flows to investors n     The issuer of the bond is obligated to pay: l      Interest (or coupon) payments periodically usually semiannually l      Par ...

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Money Market Securities

Money Market Securities n     Maturity of a year or less n     Debt securities issued by corporations and governments that need short-term funds n     Large primary market focus n     Purchased by corporations and financial institutions Money Market Securities n     Treasury Bills ...

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Monetary Theory and Policy

Monetary Theory and Policy How Monetary Policy Affects Economy Lags in Monetary Policy n     Recognition lag l      Most economic problems revealed by statistics, not observation l      Fed quick to see changes in economy n     Implementation lag l      Fed acts quickly ...

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Determination of Interest Rates

Determination of Interest Rates Are Interest Rate Movements Relevant? n     Changes in interest rates impact the real economy l      Investment spending l      Interest sensitive consumer spending such as housing n     Interest rate changes affect the values of all securities l      ...

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Role of Financial Markets and Institutions

Role of Financial Markets and Institutions Overview of Financial Markets n     Financial markets provide for financial intermediation--financial savings to investment n     Financial markets provide payments system n     Financial markets provide means to manage risk Primary vs. Secondary Markets n     PRIMARY ...

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