WPC hV-8Ե)8|@|ןN.Iž,LPIyMc!N2l\I(бؽ {^X@8Tz58JTzG.i5ڟ+!"&H'k^|xh6gabŝ'\u =xu;`g9:GeK,=&]s쨸pm7yU[ZoW_&k*TYp<_^9N>, P~pзsdTҟbӽ b@O6"WS 3Г"[̯g&{MӣwK%uo>qf 1Lq ?|-)RtFKyy@3б(MpÐл_j ʫvu#NM.c,hKAUԤ#!U@ %] 0(cH 1m 0c@ 1W 0Cww@q4 m 0 07w 0HP LaserJet 6P/6MP - Enhanced0|W  Z(CG Times Regular(($c:\Corel\Office7\Template\WP7US.WPT# e37=CIQYag1.a.i.(1)(a)(i)1)a)(;$2 e  0  .3  0  "37;?CGKOS-*+x(O$0  2 e  a  .3  0` (#(# EUEUU//'&3|x U(bd$0  0` (#(#2 e   .3  0 ` (#` (#(xj$0  0` (#(#0 ` (#` (#2 e(  0  )3  0 (# (#($0  0` (#(#0 ` (#` (#0 (# (#2 e(  a  )3  0h(#(# !  ݛC  "#C  ((Finance4000MoneyandCapitalMarkets      23  0    GeraldP.Dwyer,Jr.݌&v (#(# Ќ        0  23  0` (#(#  VicePresident,FederalReserveBankofAtlanta ݌J ` (#` (# Ќ        0  23  0` (#(#  ProfessorofEconomics,ClemsonUniversity(onleave) ݌` (#` (# Ќ        0  23  0` (#(#  4046147095 ݌` (#` (# Ќ        |0  23  0` (#(#  dwyerg@clemson.edu |݌ v` (#` (# Ќ      W23  0    GradingW݌(#(# Ќ        0  23  0` (#(#  ThreeTests"twomidtermsandafinal =݌X ` (#` (# Ќ   d   d0  0` (#(#2-3  0 ` (#` (#  midtermson2/1716and4/6andfinalon5/6d/݌, | (# (# Ќ   d   d0  0` (#(#2-3  0 ` (#` (#  datesfinaldG݌P  (# (# Ќ   d   d 0  0` (#(#2-3  0 ` (#` (#  finalcomprehensived + ݌$  (# (# Ќ         0  23  0` (#(#  Project   ݌ ` (#` (# Ќ   d   d 0  0` (#(#2-3  0 ` (#` (#  analysisofarticlesfromtheWallStreetJournalor | asimilarpublicationd ݌  (# (# Ќ   d   d 0  0` (#(#2-3  0 ` (#` (#  applyprincipleslearnedinclasstorealissuesd @ ݌  (# (# Ќ         0  23  0` (#(#  Relativeimportance  I ݌` (#` (# Ќ   d   d 0  0` (#(#2-3  0 ` (#` (#  twomidtermexamsare20percenteachd $݌b" (# (# Ќ   d   d0  0` (#(#2-3  0 ` (#` (#  projectis25percentd"݌6%  (# (# Ќ   d   d0  0` (#(#2-3  0 ` (#` (#  finalis35percentd݌ (Z# (# (# Ќ      23  0    AttendanceandHomework݌ *.&(#(# Ќ      23  0    FinancialMarkets݌(#(# Ќ        a0  23  0` (#(#  Financialmarketsaremarketsinwhichfundsare  transferredfrompeoplewhowanttolendtothosewhowanttoborrow. a݌ ` (#` (# Ќ   d   d0  0` (#(#2-3  0 ` (#` (#  Fundsaretransferredfromthosewanttopurchase , | lessthanispossiblewiththeircurrentcashflowtothosewhowanttopurchasemorethanispossiblewiththeircurrentcashflowd݌  (# (# Ќ   d   dY0  0` (#(#2-3  0 ` (#` (#  ExamplesarebondandstockmarketsdY݌>  (# (# Ќ        V0  23  0` (#(#  Generictermissecuritiesmarkets V݌b ` (#` (# Ќ   d   dA0  0` (#(#2-3  0 ` (#` (#  Asecurityisaclaimontheissuersfuturecash 6 floworassetstomakecertainpaymentsdAl݌  (# (# Ќ   d   d0  0` (#(#2-3  0 ` (#` (#  Abondisasecuritywithapromisetomake $t paymentsatcertaintimesforsomelengthoftimed݌  (# (# Ќ   j   j0  0` (#(#0 ` (#` (#23  0 (# (#  generallyissuedasdebtj݌b"(#(# Ќ   j   j0  0` (#(#0 ` (#` (#23  0 (# (#  oftenquotedintermsoftheinterestratej݌#(#(# Ќ   j   j0  0` (#(#0 ` (#` (#23  0 (# (#  Figurej݌6% (#(# Ќ   d   d0  0` (#(#2-3  0 ` (#` (#  Astockisasecuritythatrepresentsanownership  (Z# claimonacorporationd ݌  (# (# Ќ   j   j 0  0` (#(#0 ` (#` (#23  0 (# (#  forindividualstocks,quotedaspricej 8݌*.&(#(# Ќ   j   j#0  0` (#(#0 ` (#` (#23  0 (# (#  for market,haveindexnumbers"Figurej#N݌ H,'(#(# Ќ        H 0  23  0` (#(#  ForeignExchangemarkets H s ݌j` (#` (# Ќ   d   d)!0  0` (#(#2-3  0 ` (#` (#  Marketsinwhichparticipantsbuyandsellfunds > denominatedindifferentcurrenciesd)!T!݌  (# (# Ќ   d   dc"0  0` (#(#2-3  0 ` (#` (#  Forexample,fundsinUnitedStatesdollarsare , | tradedforfundsinBritishpoundssterlingdc""݌  (# (# Ќ   d   d#0  0` (#(#2-3  0 ` (#` (#  Aforeignexchangerateisthepriceofone j  countryscurrencyforanothercountryscurrencyd##݌  (# (# Ќ   d   d$0  0` (#(#2-3  0 ` (#` (#  Figured$%݌  (# (# Ќ   b      %23  0    FinancialInstitutions"Intermediaries% &݌j(#(# Ќ        &0  23  0` (#(#  Financialintermediariesarefirmsthatborrowfunds > fromsomeandmakeloanstoothers &&݌ ` (#` (# Ќ        '0  23  0` (#(#  Indirectfinanceratherbyborrowerandlenderdealing , | directlywitheachother '(݌ ` (#` (# Ќ        )0  23  0` (#(#  Examples )<)݌j ` (#` (# Ќ   d   d)0  0` (#(#2-3  0 ` (#` (#  banks"acceptdepositsandmakeloansd) *݌>  (# (# Ќ   d   d*0  0` (#(#2-3  0 ` (#` (#  insurancecompaniesd*+݌b  (# (# Ќ   d   d+0  0` (#(#2-3  0 ` (#` (#  financecompaniesd++݌6 (# (# Ќ   d   d,0  0` (#(#2-3  0 ` (#` (#  pensionfunds,mutualfundsandinvestmentbanksd,,݌  (# (# Ќ        -0  23  0` (#(#  Financialinnovations --݌` (#` (# Ќ   d   d.0  0` (#(#2-3  0 ` (#` (#  derivativesd..݌b" (# (# Ќ   d   d/0  0` (#(#2-3  0 ` (#` (#  smartcardsd//݌ 6%  (# (# Ќ      n023  0    FunctionsofFinancialMarketsandInstitutions"Figuren00݌(#(# Ќ      ^123  0    TypesofSecurities^11݌(#(# Ќ        &20  23  0` (#(#  Typeofclaim &2Q2݌X ` (#` (# Ќ   d   d20  0` (#(#2-3  0 ` (#` (#  Debt"e.g.bondd2'3݌, | (# (# Ќ   d   d30  0` (#(#2-3  0 ` (#` (#  Equity"e.g.stockd34݌P  (# (# Ќ        40  23  0` (#(#  Typeofmarkettradedin 45݌$ ` (#` (# Ќ   d   d50  0` (#(#2-3  0 ` (#` (#  Primaryd55݌  (# (# Ќ   j   j60  0` (#(#0 ` (#` (#23  0 (# (#  Aprimarymarketisamarketinwhichnew b  issuesofsecuritiesaresoldbytheissuertoinitialbuyersj66݌ (#(# Ќ   d   d70  0` (#(#2-3  0 ` (#` (#  Secondaryd7)8݌  (# (# Ќ   j   j80  0` (#(#0 ` (#` (#23  0 (# (#  Asecondarymarketisamarketinwhich $t previouslyissued(secondhand)securitiesaretradedj8 9݌ (#(# Ќ   d   d::0  0` (#(#2-3  0 ` (#` (#  Wewillfocusonsecondarymarkets.d::e:݌# (# (# Ќ   j   j6;0  0` (#(#0 ` (#` (#23  0 (# (#  Secondarymarketsaremoreliquid" 6%  cheapertotradein"andmorecontinuous.j6;a;݌ (#(# Ќ   j   j<0  0` (#(#0 ` (#` (#23  0 (# (#  ݀Issuingpricedeterminedbyexpectedprice  (Z# insecondarymarket.j<<݌ (#(# Ќ   j   j=0  0` (#(#0 ` (#` (#23  0 (# (#  Therefore,wellfocusonthesecondary *.& market.j==݌H,'(#(# Ќ        >0  23  0` (#(#  Wheretraded >$?݌` (#` (# Ќ   d   d?0  0` (#(#2-3  0 ` (#` (#  Exchangesd??݌ (# (# Ќ   d   d@0  0` (#(#2-3  0 ` (#` (#  Overthecountermarketd@@݌X  (# (# Ќ   j   jA0  0` (#(#0 ` (#` (#23  0 (# (#  dealersindifferentlocationsjAA݌ (#(# Ќ        B0  23  0` (#(#  Issuer BB݌ ` (#` (# Ќ   d   dC0  0` (#(#2-3  0 ` (#` (#  GovernmentdCC݌j  (# (# Ќ   d   dcD0  0` (#(#2-3  0 ` (#` (#  PrivatedcDD݌>  (# (# Ќ        DE0  23  0` (#(#  Termtomaturity DEoE݌b ` (#` (# Ќ   d   dF0  0` (#(#2-3  0 ` (#` (#  shortterm"ayearorlessdFHF݌6 (# (# Ќ   d   dG0  0` (#(#2-3  0 ` (#` (#  longertermdG@G݌  (# (# Ќ   j   jG0  0` (#(#0 ` (#` (#23  0 (# (#  notes"twotosevenyearsorsojG%H݌(#(# Ќ   j   j I0  0` (#(#0 ` (#` (#23  0 (# (#  bonds"longertermtomaturityj I8I݌  H(#(# Ќ       J23  0    FinancialIntermediaries JKJ݌j(#(# Ќ        J0  23  0` (#(#  Whydopeopleusefinancialintermediaries? JK݌>` (#` (# Ќ   d   dK0  0` (#(#2-3  0 ` (#` (#  Transactionscosts"economiesofscaledK L݌  (# (# Ќ   d   dL0  0` (#(#2-3  0 ` (#` (#  AsymmetricinformationdLM݌  (# (# Ќ   j   jM0  0` (#(#0 ` (#` (#23  0 (# (#  Lowercostsofacquiringinformation P  sufficientjMM݌ (#(# Ќ      O23  0    AsymmetricinformationO+O݌> (#(# Ќ        O0  23  0` (#(#  Asymmetricinformationisaninequalityofinformation b  inwhichonepartytoatransactionhasinformationabouthimselforherselfthattheotherpartydoesnothave OO݌ P` (#` (# Ќ         NQ0  23  0` (#(#  Implicationsofasymmetricinformation NQyQ݌j` (#` (# Ќ   d    d=R0  0` (#(#2-3  0 ` (#` (#  Adverseselectiond=RhR݌> (# (# Ќ   j    j(S0  0` (#(#0 ` (#` (#23  0 (# (#  Whocomesinthedoor?j(SSS݌ (#(# Ќ   j    j.T0  0` (#(#0 ` (#` (#23  0 (# (#  Beforetransactionoccursj.TYT݌, |(#(# Ќ   j    j7U0  0` (#(#0 ` (#` (#23  0 (# (#  Canaffectcontracttermstoweedoutless   desirablecustomersj7UbU݌ (#(# Ќ   j    jqV0  0` (#(#0 ` (#` (#23  0 (# (#  e.g.lifeinsurancejqVV݌j (#(# Ќ   d    duW0  0` (#(#2-3  0 ` (#` (#  MoralhazardduWW݌>  (# (# Ќ   d    dZX0  0` (#(#2-3  0 ` (#` (#  Actionstakebecausehaveloan,contractor   insurancedZXX݌  (# (# Ќ   d    duY0  0` (#(#2-3  0 ` (#` (#  Aloanislikeinsurancebecauseneednotpayin 6 caseofbankruptcyduYY݌  (# (# Ќ   d    dZ0  0` (#(#2-3  0 ` (#` (#  Haveanincentivetotakeactionsthataremore $t likelytoresultinbadoutcomesiftheyalsoaremorelikelytoproducegoodoutcomesdZZ݌  (# (# Ќ   d    d \0  0` (#(#2-3  0 ` (#` (#  HeadsIwin,;Tailsyoulose.d \5\݌# (# (# Ќ   d    d]0  0` (#(#2-3  0 ` (#` (#  Bankscanmonitorlendersbehaviorinawaythat &! financialmarketsdonotd]I]݌  (Z# (# (# Ќ  FirstMidtermisFebruary1716 > Date