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Roles of Investment Banks
-Definition &
-Functions
- Def: An organization that underwrites and distributes new investment securities and helps businesses obtain financing; help companies raise capital
- Functions: a) help corps design securities w.features that are currently attractive to investors b) buy these securities from the corp, and c) resell them to savers
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Major Types of Financial Intermediaries
-Definitions
-Primary Purpose/Function or Characteristic
Commercial Banks
Savings and Loans (S&Ls)
Credit Unions
Insurance Companies
Mutual Funds
Financial Services Corp
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Major Types of Financial Intermediaries
-Definitions
-Primary Purpose/Function or Characteristic
Commercial Banks
- Def: the traditional dept store of finance serving a variety of savers and borrowers
- -must accept deposits & make business loans
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Major Types of Financial Intermediaries
-Definitions
-Primary Purpose/Function or Characteristic
Savings and Loans (S&Ls)
- Def: historically existed to accept deposits and offer home mortgages
- -usually just do mortgages
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Major Types of Financial Intermediaries
-Definitions
-Primary Purpose/Function or Characteristic
Credit Unions
- Def: non-profit cooperative associations whose members have a common bond;
- -members often enjoy higher savings & lower lending rates
- --any $ they make goes back to the company = lower loan rates & higher deposits
- ---often the cheapest source of funds available to individual borrowers
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Major Types of Financial Intermediaries
-Definitions
-Primary Purpose/Function or Characteristic
Insurance Companies
- Def: take premiums and invest funds in stocks, bonds, real estate, etc. and make pmts to beneficiaries of insured parties
- -also provide trust services/administer pension plans
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Major Types of Financial Intermediaries
-Definitions
-Primary Purpose/Function or Characteristic
Mutual Funds
Def: orgs that pool investor funds to purchase financial instruments and thus reduce risks through diversification
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Major Types of Financial Intermediaries
-Definitions
-Primary Purpose/Function or Characteristic
Financial Services Corp
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Functions of Commercial Banks
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Types of Financial Markets
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Roles of the FED, SEC, FDIC, and Dept. of Justice
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Money Market Instruments
-All Types &
-their Characteristics
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Capital Market Instruments
-All Types &
-their Characteristics
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Primary Markets vs. Secondary Markets
-Definitions &
-Examples
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Public Markets vs. Private Markets
-Definitions &
-Examples
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Types of Stock Markets
-Definitions &
-Examples
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Efficient Market Hypothesis
-Definitions of All Forms
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Rela b/w Interest Rates and Inflation
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Definitions of All components of the Nominal Rate of Interest on a Debt Security
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Yield:
-Definition
-Rela b/w Interest Rates (yield) and Bond Prices
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Term Structure of Interest Rates
-Normal Yield curve &
-Inverted Yield Curve
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Credit Ratings
-Investment Grade vs. High Yield
-Role of the Rating Agencies
-What the Rating Scale Means (i.e. AAA v BB)
-What it Means to Have a High Rating vs. Low Rating
-What Risk are the Rating Agencies Assessing?
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Other Factors that Influence Interest Rate Levels in the US
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