货币银行 Chapter 3 英文原版教材课件

1、Chapter 3Financial Instruments, Markets, and InstitutionsLearning ObjectivesEnvision the flow of funds between savers and borrowers in a modern macroeconomyDescribe the basic differences between debt and equity and how these tools facilitate the flow of funds between savers and borrowersIdentify how

2、 financial intermediaries assist the transfer of funds from lenders to borrowers2Flow of Funds Financial system provides a transmission mechanism between saver-lenders and borrower-spenders.Savers benefitearn interestInvestors benefitaccess to money otherwise not availableEconomy benefitsefficient m

3、eans of bringing savers and borrowers together3Flow of Funds (Cont.)Funds flow indirectly from ultimate lenders households through financial intermediaries banks or insurance companies or directly through financial markets stock exchange/bond markets to ultimate borrowers business firms, government,

4、 or other households(See Figure 3.1)In order for financial system to function smoothly, must be adequate information about the markets and their operation 4FIGURE 3.1 Flow of funds from lenders to borrowers.5Financial Instruments and MarketsPrimary MarketsMarket for issuing a new security and distri

5、buting to saver-lenders.Investment BanksInformation and marketing specialists for newly issued securities.Secondary MarketsMarket where existing securities can be exchangedNew York Stock ExchangeAmerican Stock ExchangeOver-the-counter (OTC) markets6Financial Instruments and Markets (Cont.)Bonds Repr

6、esent BorrowingAgreement by issuer to pay interest on specified dates and redeem the bond upon maturity.ConsolsBond with no maturity date, pay interest foreverCoupon SecuritiesAttached to bond and sent in to collect interest generally semi-annuallyZero-couponSold at price well below face value. Coll

7、ect interest when the bond matures.Tax ExemptInterest earned is not taxed (issued by state, local, or municipal governments).7Financial Instruments and Markets (Cont.)Stocks Represent OwnershipStockholder owns part of the corporation and receives dividends from the issuer.No government stockindividu

8、als cannot “own part of the governmentTypes of Corporate stocksPreferred StockFixed dividends, priority over common stockCommon StockVariable dividends, based on companys profits.ConvertibleConvert preferred into common at a stated price8Financial Instruments and Markets (Cont.)Stocks Represent Owne

9、rship (Cont.)Like bonds, existing stock may be exchanged through secondary markets. Capital GainsDifference between price initially paid and amount received when stock is sold.Measures of trends in overall common stock pricesStandard & Poors 500 Stock Indexbased on prices of 500 individual stocksNAS

10、DAQ Composite Indexbased on all stocks listed in NASDAQDow Jones Industrial Averagebased on price of 30 “blue-chip stocks9Financial Instruments and Markets (Cont.)Both stocks and bonds securities represent a claim to a stream of payments cash flows in the futureBondsInterest payment and face value a

11、t maturityStocksDividends and sales price when sold10Financial Instruments and Markets (Cont.)Mortgages Involve Real EstateDebt incurred in order to buy land or buildingAmortizedprincipal and interest is gradually repaid over the life of loanFixed RateRate of interest is fixedVariable-RateRate of in

12、terest varies depending on financial environmentCash flow for lender is uncertainInterest payments may vary variable rate mortgagesHome owner may prepay Refinance a fixed mortgage if interest rates decline11Financial Instruments and Markets (Cont.)Mortgages Involve Real Estate (Cont.)SecuritizationI

13、ndividual mortgages may be “pooled and sold as a unit to reduce uncertainty.Mortgages may be insured by government agenciesFederal Housing Authority (FHA) or Veterans Administration (VA)12Financial Instruments and Markets (Cont.)Derivatives: Options and Futures ContractsContractual agreement between

14、 two parties to exchange a third asset in the future at a stated priceOften called derivative financial instruments because they derive value from underlying assetsLongBuyer of the contract, receive commodity in the futureShortSeller of the contract, provide commodity in the futureSpeculators gamble

15、 on price fluctuations and hope to profitEliminate the risk of price fluctuations13Financial Instruments and Markets (Cont.)The Capital MarketExchange of long-term securitiesin excess of one yearGenerally used to secure long-term financing for capital investment (Table 3.1)Stock marketLargest part o

16、f capital market and held by private and institutional investorsResidential and commercial mortgagesHeld by commercial banks and life insurance companiesCorporate bond marketHeld by insurance companies, pension and retirement fundsLocal and state government bondsPrimarily held for tax-exempt feature

17、Government securitiesHeld by commercial banks, the Fed, individual Americans/foreigners, and dealers14Financial Instruments and Markets (Cont.)The Money MarketExchange of short-term instrumentsless than one yearHighly liquid, minimal risk Use of a temporary surplus of funds by banks or businesses (T

18、able 3.2)Commercial papershort-term liabilities of prime business firms and finance companiesBank Certificates of Depositsliabilities of issuing bank, interest bearing to corporations that hold themU.S. Treasury billsshort-term debts of US government15Financial Intermediaries: Purposes and Profile R

19、ole Financial IntermediariesAct as agents in transferring funds from savers-lenders to borrowers-spenders.Acquire funds by issuing their liabilities to public and use money to purchase financial assetsEarn profits on difference between interest paid and earnedDiversify portfolios and minimize riskLo

20、wer transaction costs Competition lowers interest ratesbeneficial to economic growth16Financial Intermediaries: Purposes and ProfileFinancial Institutions in Profilefocus on composition of liabilities and assetsCommercial BanksMost prominentRange in size from huge (BankAmerica) to small (local banks

21、)Major source of funds used to be demand deposits of public, but now rely more on “other liabilitiesAlso accept savings and time depositsinterest earning17Financial Intermediaries: Purposes and Profile (Cont.)Financial Institutions in Profile (Cont.)Commercial Banks (Cont.)Purchase wide variety of a

22、ssetsshort-term government securitieslong-term business loanshome mortgages18Financial Intermediaries: Purposes and Profile (Cont.)Financial Institutions in Profile (Cont.)Life Insurance CompaniesInsure against deathReceive funds in form of premiumsUse of funds is based on mortality statisticspredic

23、t when funds will be neededInvest in long-term securitieshigh yieldLong-term corporate bondsLong-term commercial mortgages19Financial Intermediaries: Purposes and Profile (Cont.)Financial Institutions in Profile (Cont.)Pension and Retirement FundsConcerned with long runReceive funds from working ind

24、ividuals building “nest-eggAccurate prediction of future use of fundsInvest mainly in long-term corporate bonds and high-grade stockMutual FundsStock or bond market related institutionsPool funds from many peopleInvest in wide variety of securitiesminimize risk20Financial Intermediaries: Purposes an

25、d Profile (Cont.)Financial Institutions in Profile (Cont.)Money Market Mutual FundsIndividuals purchase shares in the fundFund invests in highly liquid short-term money market instrumentslarge-size negotiable CDsTreasury billshigh-grade commercial paper21Financial Intermediaries: Purposes and Profil

26、e (Cont.)Financial Institutions in Profile (Cont.)Savings and Loan Associations S&LsTraditionally acquired funds through savings depositsUsed funds to make home mortgage loansNow perform same functions as commercial banksissue checking accountsmake consumer and business loansCommercial and Consumer Finance CompaniesAcquire funds primarily by selling short term loans (commercial paper)Lend money for consumer purchases or business firms to