For each of the following transactions, identify whether it occurs in a financial market or through a financial intermediary. If the transaction occurs in a financial market, state whether it occurs in a primary or secondary market: a. The federal government sells Treasury bills at a weekly auction, where they are purchased by a pension […]

For each of the following cases, explain whatservice the financial intermediary is providing to savers or borrowers: risk sharing, liquidity, or information. a. A mutual fund allows savers to purchase shares in a large number of firms. b. A bank takes in small deposits and makes mortgage loans. c. A life insurance company offers consumers

An Annual Report for the Federal Reserve Bank of Dallas contained the following observation: “For the most part, we take the financial system’s routine workings for granted—until the machinery blows a gasket. Then we scramble to fix it, so the economy can return to the fast lane.” Why might most people, including most policymakers, tend to take

Banks typically pay low interest rates on certificates of deposit and other savings accounts. Banks use the funds from certificates of deposit to make car loans and mortgage loans on which they charge much higher rates than they pay on checking accounts. Why do people put their funds in certificates of deposit rather than earning

Some low-income countries have no stock Market and only a few banks. What would you expect the effect to be on growth in these countries? How does the globalization of financial markets improve the ability of the financial system to provide risk sharing, information, and liquidity?

The Federal Reserve Bank ofSt. Louis offers a wide range of economic data at its Web site, called FRED (research.stlouisfed. org/fred2/). Find the data for U.S. three-month and one-year Treasury bill rates from 1990 to the most recent date available and download these data into an Excel file. a. What is the average interest rate

Using data from the St. Louis Federal Reserve (FRED) (http://research.stlouisfed.org/fred2/), analyze nominal interest rates. a. Find the most recent values from FRED for the following four variables: (1) Moody’s Seasoned Aaa Corporate Bond Yield (AAA), the (2) Moody’s Seasoned Baa Corporate Bond Yield (BAA), (3) the 3-Month Treasury Bill: Secondary Market Rate (TB3MS), and (4)

Using data from the St. Louis Federal Reserve (FRED) (http://research.stlouisfed.org/fred2/), analyze changes in mortgage interest rates and interest rates on 10-Year Treasury bond. a. Find the most recent values and the values from the same month 6 years and 10 years earlier from FRED for the 30-Year Conventional Mortgage Rate (MORTG) and the 10-Year Treasury

Using data from the St. Louis Federal Reserve(FRED) (http://research.stlouisfed.org/fred2/), analyze short-term interest rates and the prime loan rate. a. Find the most recent values and the values from the same month 6 years and 10 years earlier from FRED for the Bank Prime Loan Rate (MPRIME), the Effective Fed Funds Rate (FEDFUNDS), and the 3-Month

Using data from the St. Louis Federal Reserve (FRED) (http://research.stloui sfed.org/fred2/), analyze bond prices and interest rates. a. Find the most recent values and the values from the same month 1 year and 2 years earlier from FRED for the 1-Year Treasury Bill: Secondary Market Rate (TB1YR). b. Suppose the 1-Year Treasury bill has a