金融学 双语版 课后题答案 莫琳伯顿

金融学莫林伯顿网络教学平台答案第一单元双语版内部资料哈Introduction and Overview1. Provide a short discussion or definition of the following terms: economics, finance, the financial system, net lenders, net borrowers, direct and indirect finance, financial markets, financial intermediaries, liquidity, the business cycle, depository institutions, and monetary policy.Economics: The study of how a society decides what to produce, how to produce, and who gets what; the study of how scarce resources get allocated to satisfy unl imited wants.Finance: The study of how the financial system coordinates and channels the flow of funds from lenders to borrowers—and vice versa— and how new funds are created by depository institutions during the borrowing process; the raising and using of money by households, firms, governments, and the “rest of the world” (foreign) sectors.Net lenders: Spending units such as households and firms whose spending on consumption and investment is less than income.Net borrowers: Spending units such as households and firms whose spending on consumption and investment is more than income.Direct finance: When net lenders lend their surplus funds directly to net borrowers.Indirect finance: When net lenders deposit their surplus funds into financial intermediaries which in turn, lend the funds to net borrowers; when net borrowers borrow funds from financial intermediaries that have acquired funds to lend from net lenders and that issue their own liabilities.Financial intermediaries: Financial institutions that borrow from net lenders for the purpose of lending to net borrowers; financial intermediaries such as banks, savings and loan associations, credit unions, mutual funds, insurance companies, and finance companies issue monetary and other claims on themselves; they serve as go-betweens to link up net lenders and net borrowers.Liquidity: The ease with which a financial or real asset can be converted to cash without loss of value.Business cycle: Short-run fluctuations in the level of economic activity as measured by the output of goods and services in the economy.Depository institutions: Financial intermediaries that offer checkable deposits which are subject to withdrawal by writing a check to a third party and which are part of the nation’s mone y supply.Monetary policy: The Fed’s effort to promote the overall health and stability of the economy.2. Some people have money; some people need money. Explain how the financial system links these people together.Net lenders deposit surplus funds into financial intermediaries that in turn lend the funds to net borrowers. Net lenders gain interest payments from the financial intermediaries for the use of their funds. Net borrowers make interest payments to the financial intermediaries for the use of the borrowed funds. The profit to financial intermediaries is the difference between the cost of their liabilities and the earnings on their loans and investments.5. Why do financial intermediaries exist? What services do they provide to the public? Are all financial institutions financial intermediaries?Financial intermediaries exist to link up net lenders and net borrowers and to help minimize the transactions costs associated with borrowing and lending. Financial services provided by financial intermediaries include appraising and diversifying risk, offering a menu of financial claims that are relatively safe and liquid, and pooling funds from individual net lenders. Not all financial institutions are financial intermediaries. Financial intermediaries are a type of financial institution that issue claims on themselves. Other financial institutions, such as stock and bond brokers merely link up net lenders and net borrowers for a fee and do not issue claims on themselves.8. Why does the Fed monitor the economy? What actions can the Fed take to affect the overall health of the economy?The Fed monitors the economy in order to promote the overall health and stability of the economy. The Fed can influence the economy through monetary policy. The Fed implements monetary policy to affect the level of interest rates and credit availability. When interest rates decrease and credit availability increases, the level of economic activity speeds up. When interest rates increase and credit availability decreases, the level of economic activity slows down.CHAPTER 2Principles of Money1. Discuss or define briefly the following terms and concepts: means of payment, store of value, unit of account, barter, monetary aggregates, liquidity, domestic nonfinancial debt, electronic funds transfer system, and risk.Means of payment:Something that is generally accepted and used to make payments. Store of value: Something that retains its value over time.Unit of account: A standardized accounting unit, such as the dollar, which is the standard measure of value.Barter: Trading goods for goods in an exchange economy.Monetary Aggregates: The measures of money, including MI, M2, M3, and L, which the Fed keeps track of and monitors.Liquidity: The ease with which a non-monetary asset can be converted to money without loss of value.Domestic Nonfinancial Debt:Total credit market debt owed by the nonfinancial sector and accumulated in the past and present years; includes the debt owed by the household, nonfinancial business, government, and rest of the world (foreign) sectors.EFTS (Electronic Funds Transfer System):The transfer of funds to third parties in response to electronic instructions rather than instructions written on paper checks. Risk: The possibility of financial assets losing value.2. What are the functions of money? Which function do you think is most important?The functions of money are to serve as a means of payment (medium of exchange), a unit of account, and a store of value.The most important function of money is to serve as a means of payment (medium of exchange). Thus, it is critical that money is generally accepted to make payments. Without a generally accepted means of payment, exchange is very costly. For an exchange to take place, there would have to be a double coincidence of wants where the person you wished to buy from wanted what you were offering in exchange.5. How does the Fed calculate M1, M2, M3, and DNFD? Are these aggregates all money? Why or why not? Which contains the most liquid assets? Which is smallest? Which is largest?To calculate M1, M2, M3, and DNFD, we merely add up the items included in the aggregate as follows:M1 = currency in the hands of the public + demand deposits at commercial banks + other checkable deposits + travelers’ checksM2 = M1 + small savings and time deposits (less than $100,000), including money market deposit accounts + individual money market mutual fundsM3 = M2 + large time deposits + term repurchase agreements and term Eurodollars + institutional money market mutual fundsDNFD= credit market debt of the U.S. Government and state and local governments + corporate bonds + mortgages + consumer credit (including bank loans) + other bank loans + commercial paper + other debt instrumentsAll of these aggregates except DNFD are a measure of money. M1 is the narrowest measure of money and the smallest aggregate. M1 is generally used for transactions and contains the most liquid assets—assets that are money per se. M2 and M3 are progressively broader measures of money that include M1 and other near money assets. For example, M2 contains everything in M1 plus some other highly liquid near monies. M3 contains everything in M2 plus other less liquid near money substitutes. DNFD is the largest aggregate but many of the items in DNFD are not money or near monies. DNFD is the broadest measure of nonfinancial credit in the domestic economy.10. Zoto is a remote island that has experienced rapid economic growth. In contrast, Zaha is an island where growth has been sluggish and the level of economic activity remains low. How could the existence of money have affected these two outcomes?Since money facilitates economic development, one would suspect that Zoto has a sophisticated and advanced “money,” whi le Zaha relies mainly on barter. The existence of money could explain the differing growth rates.CHAPTER 3The Role of Money and Credit2. Briefly define the interest rate, reserves, the required reserve ratio, the inflation rate, and nominal GDP.Interest Rate:The cost to borrowers of obtaining money and the return (or yield) of money to lenders.Reserves: Assets that are held by depository institutions as either vault cash or reserve deposit accounts with the Fed.Required Reserve Ratio:Depository institutions must have reserve assets equal to a certain percentage of deposit liabilities; the required reserve ratio is that percentage. The Inflation Rate: The rate of change of a price index, such as the consumer price index.Nominal GDP: The quantity of final goods and services produced in an economy during a given time period and valued at today’s prices.8. What are the sources of credit? Explain the following statement: “The money supply is measured at a point in time while the flow of credit i s measured over time.”Credit comes from depository institutions, other financial intermediaries, and other financial and nonfinancial institutions. The money supply is a stock, while credit is a flow. Flows over time lead to changes in stocks measured at different points in time. Likewise, changes in stocks measured at different points in time result from flows over time.11.Explain the difference between money and credit. Give an example of each.Money is anything that functions as a means of payment, uni t of account, and store of value. Credit is the flow of money in a given time period from net lenders or financial intermediaries to net borrowers. Currency is money whereas a loan is credit.CHAPTER 4Financial Markets, Instruments, and Market Makers1. Distinguish between primary and secondary markets and between money and capital markets.Primary markets are markets where new securities, issued to finance current deficits, are bought and sold.Secondary markets are markets where outstanding (previously issued) securities are bought and sold.The money market is the market where securities with original maturities of one year or less are traded.The capital market is the market where securities with original maturities of more than one year are traded.3. What is the difference between financial futures and financial forward markets? What are derivative markets? What are the ways derivatives can be used?In both financial futures and financial forward markets, transactions are consummated today for the purchase or sale of financial instruments on a date in future.Financial futures markets trade financial futures agreements that are standardized with regard to the financial instrument, quantities, and delivery dates. Financial futures agreements exist for U.S. government securities of several maturities, several stock market indexes, and foreign currencies.Financial forward markets trade financial forward agreements that are usually arranged by banks or other brokers and dealers and that are not standardized with regard to quantities or delivery dates.Financial futures and forward markets are, among others, derivative markets because financial futures and forward agreements “derive” their value from some underlying financial instrument. Derivative markets can be used to hedge or to speculate.8. Define commercial paper, negotiable certificates of deposit, repurchase agreements, bankers’ acceptances, federal funds, and Eurodollars. In what ways are they similar, and in what ways are they different?Commercial paper:Short-term debt instruments issued by domestic and foreign corporations.Negotiable certificates of deposit (CDs): Short-term debt instruments with typical maturities of 1 to 12 months that are sold by depository institutions and that ma ke interest payments and repay the principal at maturity; certificates of deposit have a minimum denomination of $100,000 and can be traded in secondary markets. Repurchase agreements: Short-term agreements where the seller sells a government security to a buyer with the simultaneous agreement to buy the government security back on a later date at a higher price; the difference between what the seller sells the government security for and what the seller buys it back for is in effect interest. Bankers’ a cceptances: Money market instruments created in the course of international trade to guarantee bank drafts due on a future date.Federal funds: Loans of reserves between depository institutions, typically overnight.Eurodollars:Originally considered to be deposits denominated in dollars in a foreign bank. Today, the term Eurodollar has come to mean any deposit in a foreign (host) country where the deposit is denominated in the currency of the country from which it came rather than that of the host country.The terms defined in this question are all money market instruments with original maturities of less than one year. They differ with regard to who issues the claim, whether it is a bank, a corporation, or government. They differ with regard to who the usual participants are in the market. For example, depository institutions are the borrowers and lenders in the fed funds market.10. Define and contrast stocks and bonds. What are the advantages of owning preferred stock? What are the advantages of owning common stock?Stocks are equity claims that represent ownership of the net income and assets of a corporation. The income that stockholders receive for their ownership is called dividends. Corporate bonds are long-term debt instruments issued by corporations, usually (although not always) with excellent credit ratings. The owners of such bonds receive interest payments twice a year and the principal at maturity. Bondholders are paid interest before stockholders are paid any dividends. Government bonds are issued by the federal government and are considered risk-free. The proceeds of the bonds are used to finance the deficits of the federal government.Preferred stock pays a fixed dividend and, in the event of bankruptcy, the owners of preferred stock are entitled to be paid first after other creditors of the corporation have been paid.Common stock pays a variable dividend, which is dependent on the profits that are left over after preferred stockholders have been paid and retained earnings set asi de. Owning common stock may result in higher profit rates when the company is growing and electing to pay high dividends.14. What are the fed funds rate, the Treasury bill rate, the discount rate, and the LIBOR?Fed funds rate:The interest rate charged on overnight loans of reserves from one depository institution to another. The rate is determined by the forces of supply and demand.Treasury bill rate: The interest rate on Treasury bills that is determined by the forces of supply and demand; an indicator of general levels of short-term interest rates. Discount rate:The interest rate charged by Federal Reserve Banks on discount loans to depository institutions that need to borrow reserves from the Fed. The rate is set by the Fed.LIBOR rate:The interbank rate for dollar-denominated deposits in the London market among international banks. The rate serves as a basis for quoting other international rates.CHAPTER 5Interest Rates and Bond Prices1. Define the concepts of compounding and discounting. Use future values and present values to explain how these concepts are related.Compounding is a method used to find out the future value of a present sum--that is, what is the future value of money lent (or borrowed) today.Unlike compounding, which is forward looking, discounting is in effect backward looking. Discounting is the method used to figure out what the present value of money is to be received (or paid) in the future.3. Under what conditions will a bond sell at a premium above par? At a disco unt from par?If the interest rate increases, a bond will sell at a discount from par. If the interest rate increases, the present value of the future stream of income from the bond falls and therefore its price falls.If the interest rate decreases, a bond will sell at a premium above par. If the interest rate decreases, the present value of the future stream of income from the bond rises and therefore its price rises.2.In general, discuss the movement of interest rates, the money supply, andprices over the business cycle.In expansions, GDP increases causing interest rates generally to rise because of increased demand, and inflation to pick up speed. Likewise, to prevent overheating of the economy, the Fed is generally reducing the money supply and f urther increasing interest rates.In recessions, GDP is falling, the interest rate is falling due to reduced demand and expansionary Fed policy may be causing the money supply to increase and interest rates to further fall. At the same time, upward price pressures are reduced.Thus, but not always, interest rates and inflation fluctuate pro-cyclically.7. In general, discuss the movement of interest rates, the money supply, and prices over the business cycle.In expansions, GDP increases causing interest rates generally to rise because of increased demand, and inflation to pick up speed. Likewise, to prevent overheating of the economy, the Fed is generally reducing the money supply and further increasing interest rates.In recessions, GDP is falling, the interest rate is falling due to reduced demand and expansionary Fed policy may be causing the money supply to increase and interest rates to further fall. At the same time, upward price pressures are reduced.Thus, but not always, interest rates and inflation fluctuate pro-cyclically. CHAPTER 6The Structure of Interest Rates3. According to the expectations theory, how is the long-term interest rate determined? Why is the geometric average used instead of the simpler arithmetic average?According to the expectations theory, the long-term interest rate is the geometric average of the current short-term rate and the expected future short-term rate expected to prevail over the term to maturity of the longer-term security. The geometric average is used instead of the simpler arithmetic average in order to take account of the effects of compounding.5. What determines expectations? Are expectations about future prices independent of expectations about future money supply growth rates? Why or why not?Interest rate expectations are determined by expectations about the money supply, national income or gross domestic product, and inflation. Expectations about future prices are not independent of expectations about future money supply growth rate because the larger the supply of money, the more prices will be expected to rise.8. Define preferred habitats. Explain how this modification affects the expectations theory. What could cause market segmentation based on preferred habitats to break down? How is the market segmentation hypothesis different from the expectations theory?"Preferred habitats" is the name given to the theory that borrowers and lenders have preferred maturities in which they wish to borrow and lend. While the expectation theory suggests that lenders and borrowers have no preference between long- andshort-term securities, preferred habitats suggests differently.Market segmentation based on preferred habitats could break down due to changes in liquidity premiums or if rate spreads widen enough to entice borrowers and lenders to leave their traditional borrowing and lending markets.CHAPTER 7How Exchange Rates are Determined1. Define exchange rate, foreign currency, and foreign exchange market. Exchange rate:The number of units of foreign currency that can be acquired with one unit of domestic moneyForeign currency:The supplies of foreign exchange.Foreign exchange market:The market for buying and selling the various currencies of the world.7. If interest rates in the United States were lower than rates in the rest of the world, would the United States be more likely to be experiencing a net capitalinflow or a net capital outflow? Ceteris paribus, would the current account be in surplus or deficit?If interest rates were lower in the United States than in the rest of the world, the United States would most likely experience a capital outflow. Investors would seek the higher return of securities outside the United States. The capital account would move into a deficit position. Ceteris paribus, the current account would move towards a surplus to offset the deficit in the capital account.9. What would happen to the exchange rate if foreigners decided to sell U.S. securities?If foreigners decided to sell U.S. securities, they are reducing their demand for U.S. financial instruments. The demand for dollars would fall and the exchange rate would decrease as the United States experienced a capital outflow.11.What are the assumptions of the purchasing power parity theory? What arethe reasons why the theory may not offer a complete explanation of exchange rate differentials?The theory of purchasing power parity asserts that in the long run, exchange rates adjust so that the relative purchasing power of various currencies is equalized. Thus, after full adjustment has occurred, each currency will purchase the same market basket of goods and services in every country. The assumptions of the purchasing power parity theory include that goods are identical from one country to the next, that all goods and services are tradable, that there are no transportation costs, and that there are no barriers to trade, such as tariffs. Many of the assumptions are extremely unrealistic. CHAPTER 8An Introduction to Financial Intermediaries and Risk 5. What is a depository institution? What are the main types of depository institutions? What distinguishes them from other intermediaries?A depository institution has a large part of its liabilities in the form of deposits that have been issued in order to obtain funds that can be used to make loans and other investments. Depository institutions include commercial banks, S&Ls, savings banks, and credit unions. Unlike other FIs, depository institutions play an important role in the nation’s money supply p rocess.8. What are the main sources of funds (liabilities) and uses of funds (assets) for finance company-type FIs?The main sources of funds for finance companies are corporate bonds, commercial paper, and bank loans. Finance companies use these funds t o make loans to households for the purchase of consumer durables and to businesses to finance inventories.13. How can diversification reduce credit or default risk? In the event of widespread economic collapse will diversification always reduce this risk?Diversification will help cover the losses of some investments if other investments in the portfolio are earning positive gains. The losses of some investments will be offset by the gains of others. But, in the event of a widespread economic collapse, all of the investments may be taking losses, and thus diversification may not be able to help.14. What are the major determinants of an FI’s liability structure? Give examples of each.The major determinants of an FI’s liability structure are the range of financial services offered (e.g. banking and investment services vs. insurance benefits); any specialization in a particular area, perhaps as a result of custom (e.g.S&L focus on mortgages) ; the tax status of the institution (e.g. tax exempt or not); and legal constraints or regulations (e.g. many FIs are not allowed to accept deposits).CHAPTER 9Commercial Banking Structure, Regulation, and Performance2. What is meant by a dual banking system?A dual banking system is the system in which commercial banks are chartered and regulated by either the federal government or a state government.8. What is interest rate risk? Explain several ways banks can reduce interest rate risk.Interest rate risk is the possibility that there will be a change in the intere st rate that will affect the price of the bank’s long -term assets and decrease earnings. Banks can use financial futures, options, and swaps to manage interest sate risk. Variable-rate loans can also be used to hedge against interest rate risk. The rat es on these loans will be adjusted up or down as the cost of funds rises or falls.9. What is liquidity risk? Discuss ways in which banks deal with this risk. Does the development of nondeposit liabilities increase or decrease liquidity risk?Liquidity risk is the risk that assets will not be able to be converted into cash without the loss of value. Banks deal with this risk by holding highly liquid assets and back-up lines of credit. Also, nondeposit liabilities such as use of Fed funds or repurchase agreements help decrease liquidity risk.15. What is asymmetric information?Asymmetric information is when a potential borrower knows more about the risks and returns of an investment project than the bank loan officer does.16. What is merchant banking?Merchant banking is the making of direct equity investments by a bank in start-up or growing nonfinancial businesses.CHAPTER 10Financial Innovation1. Briefly discuss the incentives that have led to a rapid pace of financial innovation in the last 40 years.Because financial claims are fungible and because other incentives have been present, the last forty years have seen a high level of financial innovation. This has occurred because the benefits of innovating have exceeded the costs.The incentives to innovate include rising interest rates which led to disintermediation, volatile interest rates which increased interest rate risk, technological advances which affected payments technologies, and increased competition.4. What are nondeposit liabilities? Give some examples. What are negotiable CDs? How do nondeposit liabilities differ from negotiable CDs? What are retail sweep accounts? What are credit derivatives?Nondeposit liabilities are borrowed funds, such as Eurodollar borrowings, fed funds, and repurchase agreements, which are not deposits and not subject to reserve requirements or Regulation Q ceilings. Nondeposit liabilities often result from there-labeling of deposit liabilities to nondeposit liabilities to get around regulations that pertain to deposits.Negotiable CDs are large certificates of deposit, which have a secondary market. Unlike nondeposit liabilities, negotiable CDs do not entail the re-labeling of deposit liabilities because negotiable CDs are deposit liabilities.A more recent innovation, retail sweep accounts are the re-labeling of deposit liabilities to nondeposit liabilities. First appearing in 1994, they “sweep” balances out of transactions accounts that are subject to reserve requirements and into other deposits (usually money market deposit accounts) that are not. Required reserves fall by the amount of funds in sweep accounts multiplied by the required reserve ratio. As required reserves fall, ceteris paribus, banks have more funds to lend.Credit derivatives are contracts that transfer the default risk of a loan or other debt instrument from the holder of the loan (beneficiary) to a guarantor who receives a fee for accepting the risk.6. What is securitization? How does securitization reduce interest rate risk? Name some types of liabilities that are now securitized.Securitization is the process whereby relatively illiquid financial assets such as mortgages are packaged together and sold off to individual investors. Securitization turns relatively illiquid instruments into quite liquid investments called asset-backed securities. A market maker agrees to create a secondary market by buying and selling the securities. Securitization originated in the mortgage market in the early 1980s, when mortgage loans began to be packaged together and sold off as securities in the secondary market often with government insurance guaranteeing that the principal and interest would be repaid. Securitization became popular because it provides a way of protecting。