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Principles of Money, Banking, and Financial Markets Plus MyEconLab Student Access Kit Package

by: Ritter, Lawrence S.; Silber, William L.; Udell, Gregory F.

Principles of Money, Banking, and Financial Markets Plus MyEconLab Student Access Kit Package

by: Ritter, Lawrence S.; Silber, William L.; Udell, Gregory F.

ISBN 13:
9780321205254
ISBN 10:
0321205251
Edition: 12th
Format: Package
Copyright: 01/01/2009
Publisher: Prentice Hall
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Summary

This classic textbook incorporates the most current research and data while taking stock of sweeping changes in the international financial landscape produced by financial innovation, deregulation, and geopolitical considerations. Well-known for its casual, conversational style, this text makes sophisticated concepts accessible.

Preface

xxv

Acknowledgments

xxx

About the Authors

xxxiii

PART I The Basics

(50)

Introducing Money, Banking, and Financial Markets

(10)

An Overview

(1)

Why Study Money, Banking, and Financial Markets?

(1)

Careers in Banking and Financial Markets

(6)

An Overview

(1)

Specific Opportunities

(1)

Trading

(1)

Sales

(1)

Financial Economist

(1)

Fixed-Income Research

(1)

Loan Officer

(1)

Bank Examiner

(1)

Key Terms

(1)

Media Resource List

(1)

The Role of Money in the Macroeconomy

(20)

Introducing Money

(1)

Going Out on a Limbs: The Launch of the Euro

(7)

Who Determines Our Money Supply?

(2)

The Importance of Money I: Money Versus Barter

(1)

The Importance of Money II: Financial Institutions and Markets

(2)

Money, the Economy, and Inflation

(8)

Bank Reserves and the Money Supply

(2)

How Large Should the Money Supply Be?

(2)

Velocity: The Missing Link

(1)

Money and Inflation

(2)

Will Paper Money Ever Disappear?

(1)

Summary

(1)

Key Terms

(1)

Questions

(1)

Media Resource List

(2)

Financial Instruments, Markets, and Institutions

(18)

Flow of Funds

(2)

Financial Instruments and Markets

(8)

Bonds Represent Borrowing

(1)

Stocks Represent Ownership

(1)

Mortgages Involve Real Estate

(1)

Derivatives: Options and Futures

(1)

The Money and Capital Markets: A Summary

(3)

Financial Intermediaries: Purposes and Profile

(5)

The Role of Financial Intermediaries

(2)

Financial Intermediaries in Profile

(3)

Summary

(1)

Key Terms

(1)

Questions

(1)

Media Resource List

(1)

PART II Financial Instruments and Markets

(144)

Interest Rate Measurement and Behavior

(24)

Calculating Interest Rates

(5)

Simple Interest

(1)

Compound Interest

(2)

Coupon Rate on Bonds

(1)

Current Yield

(1)

Yield to Maturity

(2)

Off the Record: The Million Dollar Lottery: A Case of Misleading Advertising?

(2)

Zero-Coupon Bonds

(1)

Reading the Financial News: Government Bond Market Quotations

(5)

The Inverse Relationship Between Yields and Bond Prices

(1)

Why Long-Term Bonds Are Riskier than Shorts

(1)

Nominal Versus Real Interest Rates

(1)

Return Versus Yield to Maturity

(1)

What Determines the Level of Interest Rates?

(6)

Supply and Demand Determine the Interest Rate

(3)

Why Does the Interest Rate Fluctuate?

(2)

Behind Supply and Demand

(1)

The Importance of Inflationary Expectations

(1)

In the News: Greenspan Worries That Budget Deficits Will Raise Interest Rates

(3)

Cyclical and Long-Term Trends in Interest Rates

(2)

Summary

(1)

Key Terms

(1)

Questions

(1)

Media Resource List

(1)

The Risk and Term Structure of Interest Rates

(18)

The Term Structure of Rates and the Yield Curve

(7)

Supply and Demand

(1)

The Pure Expectations Approach

(1)

The Liquidity Premium Modification

(1)

The Preferred Habitat Approach

(1)

Real-World Observations

(3)

Going Out on a Limb: Is the Shape of the Yield Curve a Crystal Ball?

(1)

An Aside on Marketability

(1)

Risk and Tax Structure of Rates

(3)

Summary

(1)

Key Terms

(1)

Questions

(1)

Media Resource List

(1)

Appendix: Bond Price Volatility: Duration Versus Maturity

(3)

Key Terms

(1)

The Structure and Performance of Securities Markets

(16)

Nature and Function of Securities Markets

(5)

Auction Market

(1)

Brokered Market

(1)

Dealer Market

(1)

Primary Versus Secondary Markets

(3)

Efficiency of Secondary Market Trading

100

(4)

In the News: After-Hours Trading Exposes Investors to Volatile Prices and Wider Spreads

104

(2)

The Computer Will Prevail

105

(1)

Efficient Capital Markets and Regulation

106

(1)

In the News: Electronic Trading Networks Look Toward the Big Board

106

(2)

Summary

108

(1)

Key Terms

108

(1)

Questions

109

(1)

Media Resource List

109

(2)

The Pricing of Risky Financial Assets

111

(12)

A World of Certainty

113

(1)

Consequences of Uncertainty and Risk Aversion

113

(3)

An Aside on Measuring Risk

115

(1)

Principles of Diversification

116

(2)

In the News: Former Workers at Lucent See Nest Eggs Vanish Too

118

(1)

The Risk Premium on Risky Securities

119

(2)

Buy an Index Fund

120

(1)

Summary

121

(1)

Key Terms

121

(1)

Questions

121

(1)

Media Resource List

122

(1)

Money and Capital Markets

123

(30)

The Government Bond Market

123

(8)

Types of Securities and Investors

124

(2)

How the Market Works

126

(1)

Treasury Bills: Auctions and Yields

126

(3)

Repurchase Agreements

129

(2)

Bank-Related Securities: CDs and Eurodollars

131

(1)

Corporate Securities

132

(2)

Corporate Bonds

132

(2)

Going Out on a Limb: Junk Is Good

134

(1)

Reading the Financial News: Corporate Bond Market Quotations

135

(1)

Commercial Paper

135

(1)

Municipal Securities

136

(3)

In the News: General Obligation Bonds Might Yield More than Revenue Bonds

139

(1)

Mortgage Securities

139

(1)

The Stock Market

140

(2)

Structure of the Stock Market

141

(1)

Reading the Financial News: Stock Market Quotations

142

(2)

What Determines Whether Stock Prices Rise or Fall?

142

(2)

Off the Record: The Dow Jones Versus the S&P 500

144

(2)

Money and Stock Prices

145

(1)

Going Out on a Limb: Dow 36,000 Versus Irrational Exuberance

146

(3)

Summary

149

(1)

Key Terms

150

(1)

Questions

150

(1)

Media Resource List

151

(2)

Demystifying Derivatives

153

(22)

An Overview of Financial Futures

153

(1)

In the News: Congress Again Tries to Tighten Derivatives a Bit

154

(4)

Using Financial Futures Contracts

157

(1)

Reading the Financial News: Financial Futures Quotations

158

(2)

Pricing Financial Futures Contracts

159

(1)

An Overview of Options Contracts

160

(3)

Using and Valuing Options

162

(1)

Reading the Financial News: Options Quotations

163

(4)

What Determines Option Premiums?

165

(2)

Going Out on a Limb: Don't Blame Derivatives

167

(1)

An Overview of Swaps

168

(3)

Why Swap?

169

(1)

Valuing a Swap

170

(1)

Summary

171

(1)

Key Terms

172

(1)

Questions

173

(1)

Media Resource List

173

(2)

Understanding Foreign Exchange

175

(20)

What Determines Foreign Exchange Rates?

175

(1)

Reading the Financial News: Foreign Exchange Quotations

176

(8)

Why Do Exchange Rates Fluctuate?

179

(5)

In the News: Dollar's Neighbors Feeling Uneasy

184

(4)

How Global Investors Cause Exchange Rate Volatility

184

(4)

Fixed Versus Floating Exchange Rates

188

(1)

How Fixed Rates Are Supposed to Work

188

(1)

In the News: Argentina Unlinks Peso from Dollar, Bracing for Devaluation and Even Harder Times

189

(3)

International Financial Crises

191

(1)

Summary

192

(1)

Key Terms

193

(1)

Questions

193

(1)

Media Resource List

194

(1)

PART III Banks and Other Intermediaries

195

(68)

The Nature of Financial Intermediation

197

(22)

The Economics of Financial Intermediation

197

(5)

The Evolution of Financial Intermediaries in the United States

202

(10)

The Shifting Sands of Interest Rates

204

(1)

The Regulation Q Security Blanket

204

(1)

The Birth of the Money Market Mutual Fund

204

(1)

The Savings and Loan Crisis

205

(3)

The Rise of Commercial Paper

208

(1)

The Institutionalization of Financial Markets

209

(1)

The Transformation of Traditional Banking

210

(2)

Financial Intermediaries: Assets, Liabilities, and Management

212

(1)

In the News: Congress Passes Wide-Ranging Bill Easing Bank Laws

213

(3)

Summary

216

(1)

Key Terms

217

(1)

Questions

218

(1)

Media Resource List

218

(1)

Depository Financial Institutions

219

(28)

The Fundamentals of Bank Management

219

(11)

Uses of Bank Funds

220

(2)

Sources of Bank Funds

222

(3)

Bank Profitability

225

(2)

Bank Risk

227

(1)

Leverage Risk

228

(1)

Credit Risk

228

(1)

Interest Rate Risk

229

(1)

In the News: Viewpoints: Mid-Tier Banks Are Especially Vulnerable to Rate Changes

230

(2)

Trading Risk

231

(1)

Liquidity Risk

231

(1)

Major Trends in Bank Management

232

(5)

The Consolidation Within the Banking Industry

232

(1)

The McFadden Act

232

(1)

The Erosion of McFadden

233

(1)

Measuring Consolidation

234

(1)

The Economics of Consolidation

234

(2)

Nontraditional Banking

236

(1)

In the News: Big Banks Signal They May Be Gearing Up for Acquisitions

237

(6)

Globalization

239

(1)

American Banks Abroad

239

(1)

Foreign Banks in the United States

240

(1)

The Euromarkets

240

(3)

Nonbank Depository Institutions---The Thrifts

243

(1)

Summary

244

(1)

Key Terms

244

(1)

Questions

245

(1)

Media Resource List

246

(1)

Nondepository Financial Institutions

247

(16)

Life Insurance Companies

247

(2)

Pension Funds

249

(2)

Property and Casualty Insurance Companies

251

(1)

In the News: Many Companies Fight Shortfalls in Pension Funds

252

(1)

Mutual Funds

253

(1)

Finance Companies

254

(1)

Securities Brokers and Dealers and Investment Banks

255

(1)

In the News: Investment Banks and Tainted Stock Research: Should Investors Have Known Better?

256

(1)

Venture Capital Funds, Mezzanine Debt Funds, and Hedge Funds

257

(1)

Banks Versus Nondepository Institutions

258

(1)

Summary

259

(1)

Key Terms

260

(1)

Questions

260

(1)

Media Resource List

261

(2)

PART IV Financial System Architecture

263

(72)

Understanding Financial Contracts

265

(26)

How Business Obtains Financing

266

(11)

Financing Small Businesses

266

(6)

Financing Midsize Businesses

272

(2)

Financing Large Businesses

274

(3)

The Economics of Financial Contracting

277

(2)

In the News: A Journey into the Secret Heart of Capitalism Turns into a Roller Coaster Ride

279

(8)

Asymmetric Information and Financial Contracting

279

(3)

Contracting and the Firm Continuum

282

(3)

Consumer Lending, Financial Contracting, and Securitization

285

(2)

Summary

287

(1)

Key Terms

288

(1)

Questions

288

(1)

Media Resource List

289

(2)

The Regulation of Markets and Institutions

291

(22)

The Regulation of Financial Markets in the United States

292

(2)

The Regulation of the Primary Market

293

(1)

The Regulation of the Secondary Markets

293

(1)

The Regulation of Commercial Banks in the United States

294

(1)

Off the Record: Insider Trading: Efficiency Versus Equity

295

(11)

The U.S. Banking Regulatory Structure

295

(2)

Regulations to Protect Individual Depositors and Financial System Stability

297

(1)

Deposit Insurance

298

(2)

Moral Hazard and Deposit Insurance

300

(1)

Risk-Based Capital Requirements

301

(2)

Prompt Corrective Action

303

(1)

Risk-Based Deposit Insurance Premiums

304

(2)

Regulation of Nondepository Financial Intermediaries

306

(1)

Where Securities Market and Banking Regulation Meet: The Glass-Steagall Act, A Collapsing Barrier

307

(3)

The Genesis of Glass-Steagall

307

(1)

The Erosion of Glass-Steagall

308

(1)

The Risk of Universal Banking

309

(1)

Summary

310

(1)

Key Terms

311

(1)

Questions

311

(1)

Media Resource List

312

(1)

Financial System Design

313

(22)

Information and Financial System Design

314

(5)

Stockholder-Lender Conflict

314

(1)

Manager-Stockholder Conflict

315

(1)

Conflict Resolution and Financial System Design

316

(1)

Small Firms: Stockholder-Lender Conflict

317

(1)

Large Firms: Stockholder-Lender Conflicts

318

(1)

Large Firms: Manager-Stockholder Conflict

318

(1)

Financial System Design: A Descriptive Summary of Germany, Japan, the United Kingdom, and the United States

319

(3)

Germany

320

(1)

Japan

321

(1)

In the News: German Banking's Industrial Revolution

322

(3)

United Kingdom

323

(1)

United States

324

(1)

Financial System Design and Conflict Resolution: Germany, Japan, the United Kingdom, and the United States

325

(5)

Conflict Resolution in the Big Four

326

(2)

And the Winner Is . . .

328

(1)

Do Corporate Scandals Mean that the Markets-Oriented Model Is a Bad Example?

329

(1)

Financial System Design for Eastern Europe and Other Emerging Economies

330

(1)

Summary

331

(1)

Key Terms

332

(1)

Questions

332

(1)

Media Resource List

333

(2)

PART V The Art of Central Banking

335

(90)

Who's in Charge Here?

337

(12)

Formal Structure of the Federal Reserve System

338

(3)

The Realities of Power

341

(2)

The Problem of Federal Reserve Independence

343

(3)

Central Bank Independence and Inflation: Lessons from History

345

(1)

Summary

346

(1)

Key Terms

346

(1)

Questions

347

(1)

Media Resource List

347

(2)

Bank Reserves and the Money Supply

349

(24)

Check Clearing and Collection

350

(2)

Going Out on a Limb: How Does Technology Affect the Payments Process?

352

(2)

Deposit Expansion: The Single Bank

354

(3)

Deposit Expansion: The Banking System

357

(2)

Deposit Contraction

359

(2)

Summary

361

(1)

Key Terms

361

(1)

Questions

362

(1)

Media Resource List

362

(1)

Appendix: The Complete Money Supply Process

363

(1)

Shifts Between Currency and Checking Deposits

364

(3)

Shifts Between Time Deposits and Checking Accounts

367

(2)

The Role of Interest Rates

369

(2)

Key Term

371

(2)

The Instruments of Central Banking

373

(16)

Reserve Requirements

373

(2)

Discounting and the Discount Rate

375

(2)

Going Out on a Limb: The Discount Window Helped to Minimize the Impact of September 11, 2001

377

(3)

The Discount Rate and Market Interest Rates

379

(1)

Open Market Operations

380

(2)

Off the Record: Three Key Interest Rates

382

(5)

A Day at the Trading Desk

384

(3)

Summary

387

(1)

Key Terms

388

(1)

Questions

388

(1)

Media Resource List

388

(1)

Understanding Movements in Bank Reserves

389

(22)

The Fed's Balance Sheet

390

(7)

The U.S. Treasury's Monetary Accounts

397

(1)

The Bank Reserve Equation

398

(2)

In the News: The Federal Reserve, Bank Reserves, and the Y2K Scare

400

(1)

Putting It All to Use

400

(2)

Focusing on the Monetary Base

402

(1)

Summary

402

(1)

Key Terms

403

(1)

Questions

403

(1)

Media Resource List

403

(1)

Appendix: Monetary Effects of Treasury Financing

404

(7)

Monetary Policy Strategy

411

(14)

The FOMC Directive

412

(1)

The Fed's Strategy

413

(7)

Reserves Versus the Federal Funds Rate

414

(5)

Can the Fed Really Control Reserves?

419

(1)

In the News: Deflation, Zero Interest Rates, and the Choice of Targets

420

(1)

The Taylor Rule and the Fed's Track Record

421

(1)

Summary

422

(1)

Key Terms

423

(1)

Questions

423

(1)

Media Resource List

423

(2)

PART VI Monetary Theory

425

(156)

The Classical Foundations

427

(24)

Say's Law

427

(2)

Classical Interest Theory

429

(2)

Off the Record: Investment Versus Investment

431

(1)

The Quantity Theory of Money

432

(3)

The Cambridge Approach

433

(2)

Money Demand and the Quantity Theory

435

(1)

Aggregate Demand and Supply: A Summary

436

(3)

Real Versus Nominal Rates of Interest

439

(1)

Modern Modifications: Monetarists and New Classicists

440

(2)

The Money Supply and the Great Depression

441

(1)

Summary

442

(1)

Key Terms

443

(1)

Questions

443

(1)

Media Resource List

444

(1)

Appendix: GDP Definitions and Relationships

445

(1)

The Circular Flow of Spending, Income, and Output

445

(1)

Saving and Investment

446

(5)

The Keynesian Framework

451

(32)

When Saving Doesn't Equal Investment

452

(2)

Consumption and Simple GDP Determination

454

(2)

Changes in GDP

456

(4)

Autonomous Versus Induced Changes in GDP

460

(1)

Exports and Imports

461

(1)

Government to the Rescue

461

(3)

Off the Record: Taking the Pulse of the Economy

464

(1)

Money and the Rate of Interest

465

(4)

Monetary Policy

469

(7)

Monetary Policy and International Trade

472

(1)

Transactions Demand and Monetary Policy

473

(2)

Expectations and Monetary Policy

475

(1)

Aggregate Demand and Supply

476

(3)

Summary

479

(1)

Key Terms

480

(1)

Questions

480

(1)

Media Resource List

481

(2)

The ISLM World

483

(36)

Money, Interest, and Income

483

(3)

All About LM

486

(3)

Monetary Policy and the LM Curve

487

(2)

The Goods Market

489

(3)

All About IS

492

(3)

The Simultaneous Determination of Income and Interest: IS and LM Together

495

(2)

Monetary and Fiscal Policy

497

(6)

Monetary Policy

497

(3)

Fiscal Policy

500

(3)

Keynes and the Classics

503

(2)

When Will Full Employment Prevail?

505

(2)

Going Out on a Limb: ISLM Analysis Lives

507

(3)

ISLM and Aggregate Demand

510

(2)

Summary

512

(1)

Key Terms

512

(1)

Questions

513

(1)

Media Resource List

513

(1)

Appendix: The Simple Algebra of Income Determination

514

(1)

The Model

514

(1)

The IS and LM Functions

515

(1)

Equilibrium Income and Interest

515

(1)

Multiplier Effects on Income and the Interest Rate

515

(1)

Policy Implications

516

(3)

Money and Economic Stability in the ISLM World

519

(16)

Monetary Policy, Fiscal Policy, and Crowding Out

519

(6)

Is the Private Sector Inherently Stable?

525

(2)

Flexible Prices, the Natural Rate of Interest, and Real Crowding Out

527

(2)

Summary

529

(1)

Key Term

530

(1)

Questions

530

(1)

Media Resource List

530

(1)

Appendix: Interest Rates Versus the Money Supply Under Uncertainty

531

(4)

An Aggregate Supply and Demand Perspective on Money and Economic Stability

535

(20)

Is the Private Sector Inherently Stable?

536

(4)

Monetary Policy, Fiscal Policy, and Crowding Out

540

(2)

Going Out on a Limb: Are Bank Loans Special?

542

(1)

Inflation, Money, and the Phillips Curve

543

(3)

Inflation and Interest Rates

546

(3)

Should a Robot Replace the Federal Reserve?

549

(4)

Summary

553

(1)

Key Terms

553

(1)

Questions

554

(1)

Media Resource List

554

(1)

Rational Expectations: Theory and Policy Implications

555

(12)

When Are Expectations Rational?

556

(1)

Anticipated Versus Unanticipated Monetary Policy

556

(1)

Off the Record: Applying Rational Expectations to the Securities Markets

557

(1)

Implications for Stabilization Policy

558

(2)

Inflation, the Phillips Curve, and Credibility

560

(3)

Interest Rates and Anticipated Monetary Policy

563

(1)

Summary

564

(1)

Key Term

564

(1)

Questions

564

(1)

Media Resource List

565

(2)

Empirical Evidence on the Effectiveness of Monetary Policy

567

(14)

Living with Velocity

568

(2)

The Demand for Money

570

(1)

Computer Simulations and Time Lags

571

(1)

Going Out on a Limb: Where Is All That Cash Hiding?

572

(2)

The Impact of Monetary Policy on GDP

574

(1)

Fiscal Policy and Crowding Out

575

(1)

The Impact of Money on Interest Rates

575

(2)

Business Investment

577

(1)

Residential Construction

578

(1)

Consumer Spending

578

(1)

Summary

579

(1)

Key Terms

579

(1)

Questions

579

(1)

Media Resource List

580

(1)

PART VII Grand Finale

581

(16)

Tying It All Together

583

(14)

The Economic Indicators

583

(4)

The Employment Report

586

(1)

In the News: Reading the Indicators: Is Employment Rising or Falling?

587

(3)

Housing Starts and Building Permits

588

(1)

Purchasing Managers' Index (PMI)

589

(1)

Index of Leading Economic Indicators

589

(1)

Valuation, the Fed, and Market Reaction

590

(1)

Good News Versus Bad News: The Role of Expectations

590

(1)

Stock and Bond Valuation---A Refresher

591

(1)

In the News: Stocks Hold Ground Gained in Big Rally---Treasury Bonds Retreat Again

591

(3)

Putting It All Together

594

(1)

Summary

595

(1)

Key Terms

595

(1)

Questions

595

(1)

Media Resource List

596

(1)

Glossary

597

(18)

Index

615

Amazon no longer offers textbook rentals. We do!

Principles of Money, Banking, and Financial Markets Plus MyEconLab Student Access Kit Package

Principles of Money, Banking, and Financial Markets Plus MyEconLab Student Access Kit Package

9780321205254

0321205251

Summary

Table of Contents

Supplemental Materials

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Amazon no longer offers textbook rentals. We do!

Principles of Money, Banking, and Financial Markets Plus MyEconLab Student Access Kit Package

Principles of Money, Banking, and Financial Markets Plus MyEconLab Student Access Kit Package

9780321205254

0321205251

Summary

Table of Contents

Supplemental Materials

Write a Review

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