第一章 为何学习金融市场与机构(英文习题及答案)
金融市场与机构课后习题答案.doc

Chapter 1Role of Financial Markets and InstitutionsQuestions1. Explain the meaning of surplus units and deficit units. Provide an example of each.ANSWER: Surplus units provide funds to the financial markets while deficit units obtain funds from the financial markets. Surplus units include households with savings, while deficit units include firms or government agencies that borrow funds.2. Distinguish between primary and secondary markets.ANSWER: Primary markets are used for the issuance of new securities while secondary markets are used for the trading of existing securities.3. Distinguish between money and capital markets.ANSWER: Money markets facilitate the trading of short-term (money market) instruments while capital markets facilitate the trading of long-term (capital market) instruments.4. Distinguish between perfect and imperfect security markets.ANSWER: With perfect financial markets, all information about any securities for sale would be freely available to investors, information about surplus and deficit units would be freely available, and all securities could be unbundled into any size desired. In reality, markets are imperfect, so that surplus and deficit units do not have free access to information, and securities can not be unbundled as desired.5. Explain why the existence of imperfect markets creates a need for financial institutions.ANSWER: Financial intermediaries are needed to facilitate the exchange of funds between surplus and deficit units. They have the information to provide this service and can even repackage deposits to provide the amount of funds borrowers desire.6. Explain the meaning of efficient markets. Why might we expect markets to be efficient most of thetime?ANSWER: If markets are efficient then prices of securities available in these markets properly reflect all information. We should expect markets to be efficient because if they weren't, investors would capitalize on the discrepancy between what prices are and what they should be. This action would force market prices to represent the appropriate prices as perceived by the market.7. In recent years, several securities firms have been guilty of using inside information when purchasingsecurities, thereby achieving returns well above the norm (even when accounting for risk). Does this suggest that the security markets are not efficient? Explain.ANSWER: Efficiency is often defined with regard to publicly available information. In this case, markets can be efficient, but investors with inside information could possibly outperform the market on a consistent basis. A stronger version of efficiency would hypothesize that even access to inside information will not consistently outperform the market.12 Chapter 1/Role of Financial Markets and Institutions8. What was the purpose of the Securities Act of 1933? What was the purpose of the SecuritiesExchange Act of 1934? Do these laws prevent investors from making poor investment decisions?Explain.ANSWER: The Securities Act of 1933 was intended to assure complete disclosure of relevantfinancial information on publicly offered securities, and prevent fraudulent practices when selling these securities. The Securities Exchange Act of 1934 extended the disclosure requirements tosecondary market issues. It also declared a variety of deceptive practices illegal, but does not prevent poor investments.9. If barriers to international securities markets are reduced, will a country's interest rate be more or lesssusceptible to foreign lending or borrowing activities? Explain.ANSWER: If international securities market barriers are reduced, a country's interest rate will likely become more susceptible to foreign lending and borrowing activities. Without barriers, funds will flow more freely in between countries. Funds would seek out countries where expected returns are high. Then, the amount of foreign funds invested in any country could adjust abruptly and affect interest rates.10. In what way could the international flow of funds cause a decline in interest rates?ANSWER: If a large volume of foreign funds was invested in the United States, it could placedownward pressure on U.S. interest rates. Without this supply of foreign funds, U.S. interest rates would have been higher.11. Distinguish between the functions of a broker and those of a dealer, and explain how each iscompensated.ANSWER: Brokers are commonly compensated with commissions on trades, while dealers are compensated on their positions in particular securities. Some dealers also provide brokerage services.12. Why is it necessary for securities to be somewhat standardized?ANSWER: Securities can be more easily traded when they are standardized because the specifics of the security transaction are well known. If securities were not standardized, transactions would be slowed considerably as participants would have to negotiate all the provisions.13. What are the functions of securities firms?ANSWER: Securities firms provide a variety of functions (such as underwriting and brokerage) that either enhance a borrower's ability to borrow funds or an investor’s abi lity to invest funds.14. Explain why some financial flows of funds cannot occur through the sale of standardized securities.ANSWER: Some financial flows, such as most commercial loans, must be provided on a personal basis, since the firms requesting loans have particular needs.15. If securities were not standardized, how would this affect the volume of financial transactionsconducted by brokers?ANSWER: If securities were not standardized, the volume of financial transactions conducted by brokers would be reduced, because the documentation would be greater.16. Commercial banks use some funds to purchase securities and other funds to make loans. Why are thesecurities more marketable than loans in the secondary market?ANSWER: Securities are more standardized than loans and therefore can be more easily sold in the secondary market. The excessive documentation on commercial loans limits a bank's ability to sell loans in the secondary market.17. How have the asset compositions of savings and loan associations differed from those of commercialbanks? Explain why and how this distinction may change over time.ANSWER: Savings and loan associations have traditionally concentrated in mortgage lending, while commercial banks have concentrated in commercial lending. Savings and loan associations are nowChapter 1/Role of Financial Markets and Institutions 3 allowed to diversify their asset portfolio to a greater degree and will likely increase theirconcentration in commercial loans (but not to the same degree as commercial banks.18. With regard to the profit motive, how are credit unions different from other financial institutions?ANSWER: Credit unions are non-profit financial institutions.19. Compare the main sources and uses of funds for finance companies, insurance companies, andpension funds.ANSWER: Finance companies sell securities to obtain funds, while insurance companies receive insurance premiums and pension funds receive employee/employer contributions. Finance companies use funds to provide direct loans to consumers and businesses. Insurance companies and pension funds purchase securities.20. What is the function of a mutual fund? Why are mutual funds popular among investors?ANSWER: A mutual fund sells shares to investors, pools the funds, and invests the funds in aportfolio of securities. Mutual funds are popular because they can help individuals diversify while using professional expertise to make investment decisions.21. How does a money market mutual fund differ from a stock or bond mutual fund?ANSWER: A money market mutual fund invests in money market securities, whereas other mutual funds normally invest in stocks or bonds.22. Classify the types of financial institutions mentioned in this chapter as either depository ornondepository. Explain the general difference between depository and nondepository institution sources of funds.ANSWER: Depository institutions include commercial banks, savings and loan associations, and credit unions. These institutions differ from nondepository institutions in that they accept deposits.Nondepository institutions include finance companies, insurance companies, pension funds, mutual funds, and money market funds.23. It is often stated that all types of financial institutions have begun to offer services that werepreviously offered only by certain types. Consequently, many financial institutions are becoming more similar in terms of their operations. Yet, the performance levels still differ significantly among types of financial institutions. Why?ANSWER: Even though financial institutions are becoming more similar, they often differ distinctly from each other in terms of sources and uses of funds. Therefore, their performance levels differ as well.24. Look in a recent business periodical for news about a recent financial transaction that involves twofinancial institutions. For this transaction, determine the following:a. How will each institution's balance sheet be affected?b. Will either institution receive immediate income from the transaction?c. Who is the ultimate user of funds?d. Who is the ultimate source of funds?ANSWER: This exercise will force students to understand how the balance sheet and incomestatement of a financial institution is affected by various transactions. When a financial institution simply acts as a middleman, income (fees or commissions) are earned, but the institution's asset portfolio is not significantly affected.25. Which types of financial institutions do you deal with? Explain whether you are acting as a surplusunit or a deficit unit in your relationship with each financial institution.ANSWER: This exercise allows students to realize that they constantly interact with financialinstitutions, and that they often play the role of a deficit unit (on car loans, tuition loans, etc.).4 Chapter 1/Role of Financial Markets and Institutions26. Explain how the privatization of companies in Europe can lead to the development of new securitiesmarkets.ANSWER: The privatization of companies will force these companies to finance with stocks and debt securities, instead of relying on the federal government for funds. Consequently, secondary markets for stocks and debt securities will be developed over time.Chapter 2Determination of Interest RatesQuestions1.Explain why interest rates changed as they did over the past year.ANSWER: This exercise should force students to consider how the factors that influence interest rates have changed over the last year, and assess how these changes could have affected interest rates.2. Explain what is meant by interest elasticity.ANSWER: Interest elasticity of supply represents a change in the quantity of loanable funds supplied in response to a change in interest rates. Interest elasticity of demand represents a change in thequantity of loanable funds demanded in response to a change in interest rates.3. Would you expect federal government demand for loanable funds to be more or less interest elasticthan household demand for loanable funds? Why?ANSWER: Federal government demand for loanable funds should be less interest elastic than the consumer demand for loanable funds, because the government's planned borrowings will likely occur regardless of the interest rate. Conversely, the quantity of loanable funds by consumers is moreresponsive to the interest rate level.4. If the federal government planned to expand the space program, how might this affect interest rates?ANSWER: An expanded space program would (a) force the federal government to increase its budget deficit, (b) possibly force any firms involved in facilitating the program to borrow more funds.Consequently, there is a greater demand for loanable funds. The additional spending could cause higher income and additional saving. Yet, this impact is not likely to be as great. The likely overall impact would therefore be upward pressure on interest rates.5. Explain why interest rates tend to decrease during recessionary periods.ANSWER: During a recession, firms and consumers reduce their amount of borrowing. The demand for loanable funds decreases and interest rates decrease as a result.6. Obtain or develop forecasts of economic growth and inflation. Use this information to forecastinterest rates one year from now.ANSWER: Open-ended question, intended to illustrate the ease of subjectively creating forecasts, but the difficulty in deciding the appropriate weight to be assigned to each influential factor.7. Jayhawk Forecasting Services analyzed several factors that could affect interest rates in the future.Most factors were expected to place downward pressure on interest rates. Jayhawk also felt that although the annual budget deficit was to be cut by 40 percent from the previous year, it would stillChapter 1/Role of Financial Markets and Institutions 5 be very large. Thus, Jayhawk believed that the deficit's impact would more than offset the othereffects and therefore forecast interest rates to increase by 2 percent. Comment on Jayhawk's logic.ANSWER: A reduction in the deficit should free up some funds that had been used to support the government borrowings. Thus, there should be additional funds available to satisfy other borrowing needs. Given this situation plus the other information, Jayhawk should have forecasted lower interest rates.8. Should increasing money supply growth place upward or downward pressure on interest rates? Justifyyour answer.ANSWER: If one believes that higher money supply growth will not cause inflationary expectations, the additional supply of funds places downward pressure on interest rates. However, if one believes that inflation expectations do erupt as a result, demand for loanable funds will also increase, and interest rates could increase (if the increase in demand more than offsets the increase in supply).9. Consider a scenario where inflation is low and is not expected to rise in the future. In addition,assume that the Fed substantially increases the money supply. Explain how this would likely affect interest rates.ANSWER: Interest rates should decrease because the amount of loanable funds will increase withouta corresponding increase in the demand for loanable funds.10. What is the logic behind the Fisher effect's implied positive relationship between expected inflationand nominal interest rates?ANSWER: Investors require a positive real return, which suggests that they will only invest funds if the nominal interest rate is expected to exceed inflation. In this way, the purchasing power of invested funds increases over time. As inflation rises, nominal interest rates should rise as well since investors would require a nominal return that exceeds the inflation rate.11. What is the difference between the nominal interest rate and real interest rate?ANSWER: The nominal interest rate is the quoted interest rate, while the real interest rate is defined as the nominal interest rate minus the expected rate of inflation. The real interest rate represents the recent nominal interest rate minus the recent inflation rate.12. Estimate the real interest rate over the last year.ANSWER: This exercise forces students to measure last year's nominal interest rate and inflation rate.13. Review historical interest rates to determine how they react to recessionary periods. Explain thisreaction.ANSWER: In general, interest rates tend to decline in recessionary periods. This reaction occurs because the demand for loanable funds declines during the recessionary periods, which placesdownward pressure of interest rates.14. Why do forecasts of interest rates differ among experts?ANSWER: Various factors may influence interest rates, and changes in these factors will affectinterest rate movements. Experts disagree about how various factors will change. They also disagree about the specific influence these factors have on interest rates.15. During the stock market crash in October 1987, interest rates declined. Use the loanable fundsframework discussed in this chapter to explain why.ANSWER: The crash led to concerns of a possible recession. The demand for loanable funds declined, causing downward pressure on interest rates. In addition, investors shifted funds out of stocks and into money market securities, causing an increase in the supply of loanable funds.6 Chapter 1/Role of Financial Markets and Institutions16. If foreign investors expected that the U.S. dollar's value would weaken over the next few years, howmight this affect (a) the foreign supply of funds to the U.S. markets and (b) U.S. interest rates?Explain.ANSWER: The expectation of a weaker U.S. dollar can cause a lower foreign supply of funds to the U.S. markets, as foreign investors reduce their investment in the United States, because a weakened dollar over the investment horizon reduces the return to foreign investors. The reduced foreign supply of funds to U.S. markets places upward pressure on U.S. interest rates.17. A well-known economist recently suggested that lower interest rates will stimulate the economy. Yet,this chapter implied that a strong economy can cause high interest rates. Do these concepts conflict?Explain.ANSWER: The concepts do not conflict. There are feedback effects between interest rates andeconomic growth. Lower interest rates stimulate the economy because they encourage borrowing and therefore spending. Yet, a strong economy can cause an additional desire to borrow, which places upward pressure on interest rates.18. Assume that if the U.S. dollar strengthens, it can place downward pressure on U.S. inflation. Basedon this information, how might expectations of a strong dollar affect the demand for loanable funds in the United States and U.S. interest rates? Is there any reason to think that expectations of a strong dollar could also affect the supply of loanable funds? Explain.ANSWER: As a strong U.S. dollar dampens U.S. inflation, it can reduce the demand for loanable funds, and therefore reduce interest rates. The expectations of a strong dollar could also increase the supply of funds because it may encourage saving (there is less concern to purchase goods before prices rise when inflationary expectations are reduced). In addition, foreign investors may invest more funds in the United States if they expect the dollar to strengthen, because that could increase their return on investment.19. If financial market participants overestimate inflation in a particular period, will real interest rates berelatively high or low? Explain.ANSWER: If inflation is overestimated, the real interest rate will be relatively high. Investors had required a relatively high nominal interest rate because they expected inflation to be high (according to the Fisher effect).20. Why might you expect interest rate movements of various industrialized countries to be more highlycorrelated in recent years than in earlier years?ANSWER: Interest rates among countries are expected to be more highly correlated in recent years because financial markets are more geographically integrated. More international financial flows will occur to capitalize on higher interest rates in foreign countries, which affects the supply and demand conditions in each market. As funds leave a country with low interest rates, this places upwardpressure on that country's interest rates. The international flow of funds caused this type of reaction.21. In November 1989, the wall separating East and West Germany was removed. Some analysts say thatthis event led to an increase in German and U.S. interest rates. Offer a possible explanation as to why this event could have caused an increase in German and U.S. interest rates.ANSWER: The removal of the wall led to the reunification of East and West Germany, and resulted in economic expansion in Germany. This led to an increased demand for loanable funds from sources in Germany and in the United States, placing upward pressure on interest rates.22. In August 1990, the Persian Gulf crisis occurred, resulting in some significant reactions in financialmarkets. Why would the crisis be expected to place upward pressure on U.S. interest rates? Why might some investors expect the crisis to place downward pressure on U.S. interest rates?ANSWER: The Persian Gulf crisis placed upward pressure on U.S. interest rates because it (1)increased inflationary expectations in the United States as oil prices increased abruptly, and (2)increased the expected U.S. budget deficit as government expenditures were necessary to boostChapter 1/Role of Financial Markets and Institutions 7 military support. However, the crisis also caused some analysts to revise their forecasts of economic growth downward. In fact, some analysts predicted that a U.S. recession would occur. The slower economy reflects a reduced corporate demand for funds, which by itself places downward pressure on interest rates. If inflation was not a concern, the Fed may attempt to increase money supply growth to stimulate the economy. However, the inflationary pressure restricted the Fed from stimulating the economy (since any stimulative policy could cause higher inflation).23. Offer an argument for why the terrorist attack on the United States on September 11, 2001 couldplace downward pressure on U.S. interest rates. Offer an argument for why the terrorist attack could place upward pressure on U.S. interest rates.ANSWER: The terrorist attack could cause a reduction in spending related to travel (airlines, hotels), and would also reduce the expansion by those types of firms. This reflects a decline in the demand for loanable funds, and places downward pressure on interest rates. Conversely, the attack increases the amount of government borrowing needed to support a war, and therefore places upward pressure on interest rates.Interpreting Financial NewsInterpret the following comments made by Wall Street analysts and portfolio managers.a. “The flight of funds from bank deposits to U.S. stocks will pressure interest rates.”As the supply of loanable funds declines (due to bank deposit withdrawals), there will be upward pressure on interest rates.b. “Since Japanese interest rates have recently declined to very low levels, expect a reduction in U.S.interest rates.”As Japanese interest rates decline, Japanese savers invest more loanable funds in the UnitedStates, which places downward pressure on U.S. interest rates.c. “The cost of borrowing by U.S. firms is dictated by the degree to which the federal governmen tspends more than it taxes.”As the federal government spends more than it taxes, it borrows the difference; the greater theamount borrowed, the higher the pressure on U.S. interest rates.Managing in Financial MarketsAs the treasurer of a manufacturing company, your task is to forecast the direction of interest rates. You plan to borrow funds and may use the forecast of interest rates to determine whether you should obtain a loan with a fixed interest rate or a floating interest rate. The following information can be considered when assessing the future direction of interest rates:♦Economic growth has been high over the last two years, but you expect that it will be stagnant over the next year.♦Inflation has been 3 percent over each of the last few years, and you expect that it will be about the same over the next year.♦The federal government has announced major cuts in its spending, which should have a major impact on the budget deficit.♦The Federal Reserve is not expected to affect the existing supply of loanable funds over the next year. ♦The overall level of savings by households is not expected to change.a. Given the preceding information, determine how the demand for and the supply of loanable fundswould be affected (if at all), and determine the future direction of interest rates.The demand for loanable funds should decline in response to: (1) stagnant economic growth(because a relatively low level of borrowing will be needed), and (2) a major cut in government8 Chapter 1/Role of Financial Markets and Institutionsspending. The supply of loanable funds should remain unchanged because the savings level is not expected to change, and the Fed is not expected to affect the existing money supply. Given a large decline in the demand for loanable funds and no significant change in the supply of loanablefunds, U.S. interest rates should decline.b. You can obtain a one-year loan at a fixed-rate of 8 percent or a floating-rate loan that is currentlyat 8 percent but would be revised every month in accordance with general interest ratemovements. Which type of loan is more appropriate based on the information provided?Since interest rates are expected to decline, you should prefer the floating-rate loan. As interest rates decline, the rate charged on this type of loan would decline.c. Assume that Canadian interest rates have abruptly risen just as you have completed your forecastof future U.S. interest rates. Consequently, Canadian interest rates are now 2 percentage pointsabove U.S. interest rates. How might this specific situation place pressure on U.S. interest rates?Considering this situation along with the other information provided, would you change yourforecast of the future direction of U.S. interest rates?This situation could encourage U.S. individuals and firms to withdraw their savings from U.S.financial institutions and send their funds to Canada to earn a higher interest rate (although they would have to convert their U.S. dollars into Canadian dollars and are therefore exposed toexchange rate risk). To the extent that savings are withdrawn from U.S. financial institutions,there would be a reduction in the supply of loanable funds in the U.S. Consequently, this specific situation places upward pressure on the U.S. interest rates.While this specific situation places upward pressure on U.S. interest rates, the economic growth and the budget deficit are expected to place downward pressure on interest rates.Therefore, you would still forecast a decline in U.S. interest rates, unless you believe that theimpact of the Canadian situation would overwhelm the impact of the economic growth and thebudget deficit.Problems1.Suppose the real interest rate is 6 percent and the expected inflation is 2 percent. What would youexpect the nominal rate of interest to be?ANSWER:i = E(INF) + i ki = 2% + 6% = 8%2. Suppose that Treasury bills are currently paying 9 percent and the expected inflation is 3 percent.What is the real interest rate?ANSWER:i = E(INF) + i ki k = i – E(INF)i k = 9% – 3% = 6%Chapter 3Structure of Interest RatesChapter 1/Role of Financial Markets and Institutions 9Questions1.Identify the relevant characteristics of any security that can affect the security's yield.ANSWER:The relevant characteristics are:1. default risk2. liquidity3. tax status4. maturity5. special provisions (such as a call feature)2. What effect does a high credit risk have on securities?ANSWER: Investors require a higher risk premium on securities with a high default risk.3. Discuss the relationship between the yield and liquidity of securities.ANSWER: The greater the liquidity of a security, the lower is the yield, other things being equal.4. Do investors in high-tax brackets or those in low-tax brackets benefit more from tax-exemptsecurities? Why?ANSWER: High-tax bracket investors benefit more from tax-exempt securities because their tax savings from avoiding taxes is greater.5. Do municipal bonds or corporate bonds offer a higher before-tax yield at a given point in time? Why?Which has the higher after-tax yield?ANSWER: Corporate bonds offer a higher before-tax yield, since they are taxable by the federal government. The municipal bonds may have a higher tax yield for investors subject to a high tax rate.For low-tax bracket investors, the corporate bonds would likely have a higher after-tax yield.6. If taxes did not exist, would Treasury bonds offer a higher or lower yield than municipal bonds withthe same maturity? Why?ANSWER: Treasury bonds would offer a lower yield than municipal bonds because they areperceived to be risk-free. If taxes did not exist, the required return on Treasury bonds would be lower than on municipal bonds.7. Explain how a yield curve would shift in response to a sudden expectation of rising interest rates,according to the pure expectations theory.ANSWER: The demand for short-term securities would increase, placing upward (downward)pressure on their prices (yields). The demand for long-term securities would decrease, placingdownward (upward) pressure on their prices (yields). If the yield curve was originally upward sloped, it would now have a steeper slope as a result of the expectation. If it was originally downward sloped, it would now be more horizontal (less steep), or may have even become upward sloping.8. What is the meaning of the forward rate in the context of the term structure of interest rates?ANSWER: The forward rate is the expected interest rate at a future point in time.9. Why might forward rates consistently overestimate future interest rates? How could such a bias beavoided?ANSWER: If forward rates are estimated without considering the liquidity premium, it mayoverestimate the future interest rates. If a liquidity premium is accounted for when estimating the forward rate, the bias can be eliminated.10. Assume there is a sudden expectation of lower interest rates in the future. What would be the effecton the shape of the yield curve? Explain.ANSWER: The demand for short-term securities would decrease, placing downward (upward)pressure on their prices (yields). The demand for long-term securities would increase, placing upward。
米什金《货币金融学》(第11版)笔记和课后习题详解

米什金《货币金融学》(第11版)笔记和课后习题详解(1)浓缩内容精华,整理名校笔记。
(2)解析课后习题,提供详尽答案。
国内外教材一般没有提供课(章)后习题答案或者答案很简单,(3)补充相关要点,强化专业知识。
一般来说,国外英文教材的中译本不太符合中国学生的思维习惯,有些语言的表述不清或条理性不强而给学习带来了不便,因此,对每章复习笔记的一些重要知识点和一些习题的解答,我们在不违背原书原意的基础上结合其他相关经典教材进行了必要的整理和分析。
第1篇引言第1章为什么研究货币、银行与金融市场1.1 复习笔记1为什么研究金融市场金融市场是指将资金剩余方的资金转移到资金短缺方的市场。
通过债券市场和股票市场等金融市场,资金从没有生产用途的人向有生产用途的人转移,从而提高了经济效率。
此外,金融市场上的变化还直接影响着个人财富、企业和消费者的行为以及经济周期。
(1)债券市场和利率证券是对发行人未来收入与资产的索取权。
债券是债务证券,它承诺在一个特定的时间段中进行定期支付,债券包括长期债务工具和短期债务工具。
债券市场可以帮助政府和企业筹集到所需要的资金,并且是决定利率的场所,因此在经济活动中有着重要的特殊意义。
利率是借款的成本或为借入资金支付的价格(通常以一定时期内的利息额同本金额的比率来表示)。
利率对整个经济的健康运行有着很大的影响:对于个人来说,利率过高倾向于使其减少消费,增加储蓄;对于企业来说,利率还影响着企业的投资决策,利率的高低决定着企业投资成本的高低。
(2)股票市场普通股(简称为股票)代表持有者对公司的所有权,是对公司收益和资产的索取权。
股票市场是指人们交易股票的市场。
股票市场的价格波动会影响到人们的财富水平,进而对他们的消费意愿产生影响。
股票市场也是影响投资决策的一个重要因素,因为股票价格的高低决定了发行股票所能筹集到的资金数量,从而限制了企业可用于投资的资金。
企业股票的价格高,则他们可以筹集到更多的资金,用于购买更多的生产设施以及装备。
fabozzi_金融市场与金融机构基础课后答案.doc

CHAPTER 4THE U.S. FEDERAL RESERVEAND THE CREATION OF MONEYCENTRAL BANKS AND THEIR PURPOSEThe primary role of a central bank is to maintain the stability of the currency and money supply for a country or a group of countries. The role of central banks can be categorized as: (1) risk assessment, (2) risk reduction, (3) oversight of payment systems, (4) crisis management.One of the major ways a central bank accomplishes its goals is through monetary policy. For this reason, central banks are sometimes called monetary authority. In implementing monetary policy, central banks, acting as a reserve bank, require private banks to maintain and deposit the required reserves with the central bank. In times of financial crisis, central banks perform the role of lender of last resort for the banking system. Countries throughout the world may have central banks. Additionally, the European Central Bank is responsible for implementing monetary policy for the member countries of the European Union.There is widespread agreement that central banks should be independent of the government so that decisions of the central bank will not be influenced for short-term political purposes such as pursuing a monetary policy to expand the economy but at the expense of inflation.In implementing monetary and economic policies, the United States is a member of an informal network of nations. This group started in 1976 as the Group of 6, or G6: US, France, Germany, UK, Italy, and Japan. Thereafter, Canada joined to for the G7. In 1998, Russia joined to form the G8.THE CENTRAL BANK OF THE UNITED STATES: THE FEDERAL RESERVE SYSTEMThe Federal Reserve System consists of 12 banking districts covering the entire country. Created in 1913, the Federal Reserve is the government agency responsible for the management of the US monetary and banking systems. It is independent of the political branches of government. The Fed is managed by a seven-member Board of Governors, who are appointed by the President and approved by Congress.The Fed's tools for monetary management have been made more difficult by financial innovations. The public's increasing acceptance of money market mutual funds has funneled a large amount of money into what are essentially interest-bearing checking accounts. Securitization permits commercial banks to change what once were illiquid consumer loans of several varieties into securities. Selling these securities gives the banks a source of funding that is outside the Fed's influence.INSTRUMENT OF MONETARY POLICY: HOW THE FED INFLUENCES THE SUPPLY OF MONEYThe Fed has three instruments at its disposal to affect the level of reserves.Reserve RequirementsUnder our fractional reserve banking system have to maintain specified fractional amounts of reserves against their deposits. The Fed can raise or lower these required reserve ratios, thereby permitting banks to decrease or increase their lending and investment portfolios. A bank's total reserves equal its required reserves plus any excess reserves.Open Market OperationsThe Fed's most powerful instrument is its authority to conduct open market operation. It buys and sells in open debt markets government securities for its own accounts. The Fed prefers to use Treasury bills because it can make its substantial transactions without seriously disrupting the prices or yields of bills.The Federal Open Market Committee, or FOMC, is the unit that decides on the general issues of changing the rate of growth in the money supply, by open market sales or purchases of securities. The implementation of policy through open market operations is the responsibility of the trading desk of the Federal Reserve Bank of New York.Open Market Repurchase AgreementsThe Fed often employs variants of simple open market purchases and sales, these are called the repurchase agreement (or repo) and the reverse repo. In a repo, the Fed buys a particular amount of securities from a seller that agrees to repurchase the same number of securities for a higher price at some future time. In a reverse repo, the Fed sells securities and makes a commitment to buy them back at a higher price later.Discount RateA bank borrowing from the Fed is said to use the discount window. The discount rate is the rate charged to banks borrowing directly from the Fed. Raising the rate is designed to discourage such borrowing, while lowering should have the opposite effect.DIFFERENT KINDS OF MONEYMoney is that item which serves as a numeraire. In a basic sense money can be defined as anything that serves as a unit of account and medium of exchange. We measure prices in dollars and exchange dollars for goods. Hence coins, currency, and any items readily exchanged into dollars (checking deposits or NOW accounts) constitute our money supply.MONEY AND MONETARY AGGREGATESMonetary aggregates measure the amount of money available to the economy at any time. The monetary base is defined as currency in circulation (coins and federal reserve notes) and reserves in the banking system. The instruments that serve as a medium of exchange can be narrowly defined as Mi, which is currency and demand deposits. M2 is Mi plus time and savings accounts, and money market mutual funds. Finally, M3 is M? plus short-term Treasury liabilities. While all three aggregates are watched and monitored, Mi is the most common form of the money supply, with its trait as being the most liquid. The ratio of the money supply to the economy's income is known as the velocity of money.THE MONEY MULTIPIER: THE EXPANSION OF THE MONEY SUPPLYThe money multiplier effect arises from the fact that a small change in reserves can produce a large change in the money supply. Through our fractional reserve system, a small increase will allow an individual bank, to lend out the greater part of these additional funds. These loans subsequently become deposits in other banks allowing them to expand proportionately. So, while one bank can expand its loans (or deposits) by an amount 1% of reserves required, all banks in the system can do likewise. Thus, in a simple format total change in deposits can be stated as change in reserves divided by the reserve requirement, which is also the formula for perpetuity. For example, if the change in the level of reserves is $100 and the reserve requirement is 20%, the change in total deposits will be $500 for a multiplier of 5. Of course, major assumptions are that banks will fully loan out their excess reserves and that depositors will not withdraw any of these extra reserves. THE IMPACT OF INTEREST RATES ON THE MONEY SUPPLYHigh rates of interest may make keeping excess reserves costly, since unused funds represent loans not made and interest not earned. High rates of interest will also affect the public's demand for holding cash. If deposits pay competitive interest rates, customers will be more willing to hold such bank liabilities and less cash. Therefore, a higher rate of interest can actually spur growth of the money supply. More likely, however, it will deter borrowing and slow monetary growth.THE MONEY SUPPLY PROCESS IN AN OPEN ECONOMYIn the modern era, almost every country has an open economy. Foreign commercial and central banks hold dollar accounts in the United States. Their purchases and sales of these deposits can affect exchange rates of the dollar against their own currency. The Fed has responsibility for maintaining stability in exchange rates. A purchase of foreign exchange with dollars depreciates the dollar's value, but it also adds dollars to the accounts of foreign banks in this country, thus adding to the U.S. monetary base. Most central banks of large economies own or stand ready to own a large amount of each of the world's major currencies, which are considered international reserves. Sales of foreign exchange transactions have monetary base implication and hence consequences for the domestic money supply, emphasis is given to coordinating monetarypolicies among developed nations.ANSWERS TO QUESTIONS FOR CHAPTER 4(Questions are in bold print followed by answers.)1.What is the role of a central bank?The role of a central bank has several functions: risk assessment, risk reduction, oversight of payment systems, and crisis management. It can do this through monetary policies, and through the implementation of regulations.2.Why is it argued that a central bank should be independent of the government?Central banks should be independent of the short-term political interests and political influences generally in setting economic policies.3.Identify each participant and its role in the process by which the money supply changes and monetary policy is implemented.The Fed determines monetary policy and seeks to implement it through changes in reserves. It is up to the nation's banking system to act on changes in reserves thereby affecting deposits, which constitute the greater part of the M| definition of the money supply.4.Describe the structure of the board of governors of the Federal Reserve System.The Board of Governors of the Federal Reserve System consists of 7 members who are appointed to staggered 14-year terms. The Board reviews discount operations and sets legal reserve requirements. In addition, all 7 members of the Board serve on the Federal Open Market Committee (FOMC), which determines the direction and magnitude of open-market operations. Such operations constitute the key instrument for implementing monetary policy.5.a・ Explain what is meant by the statement "the United States has a fractional reserve banking system."b. How are these items related: total reserves, required reserves, and excess reserves?a. A fractional reserve system requires that a fraction or percent of a bank's reserve be placedeither in currency in vault or with the Federal Reserve System.b.Total reserves are the amounts that banks hold in cash or at the Fed. Required reserves areamounts required by the Fed to meet some specific or legal reserve ratio to deposits. Excess reserves are bank reserves in currency and at the Fed which are in excess of legal requirements.Since these amounts are non-interest bearing, banks are often willing to lend these surplus funds to deficit banks at the Fed funds rate.5.What is the required reserve ratio, and how has the 1980 Depository Institutions Deregulation and Monetary Control Act constrained the Fed's control over the ratio?The required reserve ratio is the fraction of deposits a bank must hold as reserves. The DIDMCA constrained the Fed's control over the ratio by letting Congress set ranges of reserves for demand and time deposits.6.In what two forms can a bank hold its required reserves?A bank can hold its reserves in the form of currency in vault or in deposit at the Fed.8.a.What is an open market purchase by the Fed?b.Which unit of the Fed decides on open market policy, and what unit implements thatpolicy?c.What is the immediate consequence of an open market purchase?a.An open market purchase by the Fed consists of the purchase of U.S. Treasury securities.b.The FOMC decides on open market policy and directs the Federal Reserve Bank of New Yorkto implement it through sales and purchases of these securities.c.The immediate consequence of an open market purchase is to supply the seller of the securitywith a check on the Federal Reserve System that he can deposit in his bank, therebyimmediately increasing the excess reserves and thus nation's money supply.7.Distinguish between an open market sale and a matched sale (which is the same as a matched sale-purchase transaction or a reverse repurchase agreement).A matched sale or reverse repo involves the sale of a Treasury security with an agreement to buy it back at a later date and at a higher price as the cost for borrowing the funds. This contrasts with an outright sale at some discounted or premium price.8.What is the discount rate, and to what type of action by a bank does it apply?The discount rate is the rate a bank pays to borrow a t the "discount window” of the Fed. Such borrowings are often undertaken to meet temporary liquidity needs. Bank needs are monitored and the Fed likes to state that borrowing from it is a "privilege and not a right.”IL Define the monetary base and M2The monetary base includes total bank reserves plus currency in the hands of the public. M2 = Mi (currency and demand deposits) + savings and time deposits.12.Describe the basic features of the money multiplier.The money multiplier is crucial to the concept of money creation and is analogous to the idea of the autonomous spending multiplier and formula for a perpetuity. It is the inverse of the required reserve ratio (1/rr). If the reserve ratio is .2 then the money supply will expand five times any increase in new deposits. The multiplier will be less if banks hold excess reserves or experience cash drains.13.Suppose the Fed were to inject $100 million of reserves into the banking system by an open market purchase of Treasury bills. If the required reserve ratio were 10%, what is the maximum increase in Mi that the new reserves would generate? Assume that banks make all the loans their reserves allow, that firms and individuals keep all their liquid assets in depository accounts, and no money is in the form of currency.The maximum increase in Mi will be $1 billion assuming no cash drains in the system, and banks are fully loaned up.14.Assume the situation from question 13, except now assume that banks hold a ratio of0.5% of excess reserves to deposits and the public keeps 20% of its liquid assets in the form of cash. Under these conditions, what is the money multiplier? Explain why this value of the multiplier is so much lower than the multiplier from question 13.Substitute the given values of currency ratio, required reserves ratio, and excess reserves ratio of 20%, 10% and 0.5% respectively into the formula given on page 94 of the textbook. Now we have a lower multiplier value of 3.9=1.20A 305. This is because public and banks do not deposit or lend, all they can.。
《金融英语》习题答案unit1-10

“高职高专商务英语专业规划教材”Unit 1 Financial Market Research练习参考答案I.Read through the text and answer the following questions.1.A financial market is a mechanism that allows people to easily buy andsell (trade) financial securities (such as stocks and bonds), commodities (such as precious metals or agricultural goods), and other fungible items of value at low transaction costs and at prices that reflect the efficient-market hypothesis.2.The raising of capital ;the transfer of risk and international trade3.Capital markets,commodity markets,money markets, derivative markets,insurance markets and foreign exchange markets .4.Financial markets fit in the relationship between lenders andborrowers.5.Individuals, companies, governments, municipalities and publiccorporations.II. Paraphrase the following expressions or abbreviations and translate them into ChineseCheck the answers from the Special Term Lists.III. Fill in the blanks with the proper wordsThe global financial crisis, brewing for a while, really started to show its effects in the middle of 2007 and into 2008. Around the world stock markets have fallen, large financial institutions have collapsed or been bought out, and governments in even the wealthiest nations have had to come up with rescue packages to bail out their financial systems.On the one hand many people are concerned that those responsible for the financial problems are the ones being bailed out, while on the other hand, a global financial meltdown will affect the livelihoods of almost everyone in an increasingly inter-connected world. The problem could have been avoided, if ideologues supporting the current economics models weren’t so vocal, influential and inconsiderate of others’ viewpoints and concerns.IV.Translation.1.金融市场包括很多方面,包括资本市场,华尔街,甚至是市场本身。
第一章--为何学习金融市场与机构(英文习题及答案)

Chapter 1 Why Study Financial Markets and Institutions?1.1 Single Choice1)Financial markets and institutionsA)involve the movement of huge quantities of money.B)affect the profits of businesses.C)affect the types of goods and services produced in an economy.D)do all of the above.E)do only A and B of the above.2)Financial market activities affectA) personal wealth.B) spending decisions by individuals and business firms.C) the economy's location in the business cycle.D) all of the above.3) Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are calledA) commodity markets.B) funds markets.C) derivative exchange markets.D) financial markets.4) The price paid for the rental of borrowed funds (usually expressedas a percentage of the rental of $100 per year) is commonly referred to as theA) inflation rate.B) exchange rate.C) interest rate.D) aggregate price level.5) The bond markets are important becauseA) they are easily the most widely followed financial markets in the United States.B) they are the markets where interest rates are determined.C) they are the markets where foreign exchange rates are determined.D) all of the above.6) Interest rates are important to financial institutions since an interest rate increase _________ the cost of acquiring funds and _________ the income from assets.A) decreases; decreasesB) increases; increasesC) decreases; increasesD) increases; decreases7) Typically, increasing interest ratesA) discourages individuals from saving.B) discourages corporate investments.C) encourages corporate expansion.D) encourages corporate borrowing.E) none of the above.8) Compared to interest rates on long-term U.S. government bonds, interest rates on _________ fluctuate more and are lower on average.A) medium-quality corporate bondsB) low-quality corporate bondsC) high-quality corporate bondsD) three-month Treasury billsE) none of the above9) Compared to interest rates on long-term U.S. government bonds, interest rates on three-month Treasury bills fluctuate _________ and are _________ on average.A) more; lowerB) less; lowerC) more; higherD) less; higher10) The stock market is important becauseA) it is where interest rates are determined.B) it is the most widely followed financial market in the UnitedStates.C) it is where foreign exchange rates are determined.D) all of the above.11) Stock prices since the 1950s have beenA) relatively stable, trending upward at a steady pace.B) relatively stable, trending downward at a moderate rate.C) extremely volatile.D) unstable, trending downward at a moderate rate.12) The largest one-day drop in the history of the American stock markets occurred inA) 1929.B) 1987.C) 2000.D) 2001.13) A rising stock market index due to higher share pricesA) increases people's wealth and as a result may increase their willingness to spend.B) increases the amount of funds that business firms can raise by selling newly issued stock.C) decreases the amount of funds that business firms can raise by selling newly issued stock.D) both A and B of the above.14) A declining stock market index due to lower share pricesA) reduces people's wealth and as a result may reduce their willingness to spend.B) increases people's wealth and as a result may increase their willingness to spend.C) decreases the amount of funds that business firms can raise by selling newly issued stock.D) both A and C of the above.E) both B and C of the above.15) Changes in stock pricesA) affect people's wealth and their willingness to spend.B) affect firms' decisions to sell stock to finance investment spending.C) are characterized by considerable fluctuations.D) all of the above.E) only A and B of the above.16) (I) Debt markets are often referred to generically as the bond market. (II) A bond is a security that is a claim on the earnings and assets of a corporation.A) (I) is true, (II) false.B) (I) is false, (II) true.C) Both are true.D) Both are false.17) (I) A bond is a debt security that promises to make payments periodically for a specified period of time. (II) A stock is a security that is a claim on the earnings and assets of a corporation.A) (I) is true, (II) false.B) (I) is false, (II) true.C) Both are true.D) Both are false.18) The price of one country's currency in terms of another's is calledA) the exchange rate.B) the interest rate.C) the Dow Jones industrial average.D) none of the above.19) A stronger dollar benefits _________ and hurts _________A) American businesses; American consumers.B) American businesses; foreign businesses.C) American consumers; American businesses.D) foreign businesses; American consumers.20) A weaker dollar benefits _________ and hurts _________A) American businesses; American consumers.B) American businesses; foreign consumers.C) American consumers; American businesses.D) foreign businesses; American consumers.21)From 1980 to early 1985 the dollar _________ in value, thereby benefiting American _________A) appreciated; businesses.B) appreciated; consumers.C) depreciated; businesses.D) depreciated; consumers.22) Money is defined asA) anything that is generally accepted in payment for goods and services or in the repayment of debt.B) bills of exchange.C) a riskless repository of spending power.D) all of the above.E) only A and B of the above.23) The organization responsible for the conduct of monetary policy in the United States is theA) Comptroller of the Currency.B) U.S. Treasury.C) Federal Reserve System.D) Bureau of Monetary Affairs.24) The central bank of the United States isA) Citicorp.B) The Fed.C) Bank of America.D) The Treasury.E) none of the above.25) Monetary policy is chiefly concerned withA) how much money businesses earn.B) the level of interest rates and the nation's money supply.C) how much money people pay in taxes.D) whether people have saved enough money for retirement.26) Economists group commercial banks, savings and loan associations, credit unions, mutual funds, mutual savings banks, insurance companies, pension funds, and finance companies together under the heading financial intermediaries. Financial intermediariesA) act as middlemen, borrowing funds from those who have saved andlending these funds to others.B) produce nothing of value and are therefore a drain on society's resources.C) help promote a more efficient and dynamic economy.D) do all of the above.E) do only A and C of the above.27) Economists group commercial banks, savings and loan associations, credit unions, mutual funds, mutual savings banks, insurance companies, pension funds, and finance companies together under the heading financial intermediaries. Financial intermediariesA) act as middlemen, borrowing funds from those who have saved and lending these funds to others.B) play an important role in determining the quantity of money in the economy.C) help promote a more efficient and dynamic economy.D) do all of the above.E) do only A and C of the above.28) Banks are important to the study of money and the economy because theyA) provide a channel for linking those who want to save with thosewho want to invest.B) have been a source of rapid financial innovation that is expanding the alternatives available to those wanting to invest their money.C) are the only financial institution to play a role in determining the quantity of money in the economy.D) do all of the above.E) do only A and B of the above.29) Banks, savings and loan associations, mutual savings banks, and credit unionsA) are no longer important players in financial intermediation.B) have been providing services only to small depositors since deregulation.C) have been adept at innovating in response to changes in the regulatory environment.D) all of the above.E) only A and C of the above.30) (I) Banks are financial intermediaries that accept deposits and make loans. (II) The term "banks" includes firms such as commercial banks, savings and loan associations, mutual savings banks, credit unions, insurance companies, and pension funds. A) (I) is true, (II) false.B) (I) is false, (II) true.C) Both are true.D) Both are false.31) ____ was the stock market's worst one-day drop in history in the 1980s.A) Black FridayB) Black MondayC) Blackout DayD) none of the above32) The largest financial intermediaries areA) insurance companies.B) finance companies.C) banks.D) all of the above.33) In recent yearsA) interest rates have remained constant.B) success of financial institutions have reached levels unprecedented since the Great Depression.C) stock markets have crashed.D) all of the above.34) A securityA) is a claim or price of property that is subject to ownership.B) promises that payments will be made periodically for a specified period of time.C) is the price paid for the usage of funds.D) is a claim on the issuer's future income.35) ____ are considered a financial institutions.A) BanksB) Insurance companiesC) Finance companiesD) Investment banks36) Monetary policy affectsA) interest rates.B) inflation.C) business cycles.D) all of the above.答案:1-5:DDDCB 6-10:BBDAB 11-15:CBDDD 16-20:ACACA 21-25:BACBB 26-30:EDECA 31-36:BCCDDD。
金融学课后习题答案英文

CHAPTER 1WHAT IS FINANCE?ObjectivesDefine finance.Explain why finance is worth studying.Introduce the main players in the world of finance—households and firms—and the kinds of financial decisions they make.OutlineDefining FinanceWhy Study Finance?Financial Decisions of HouseholdsFinancial Decisions of FirmsForms of Business OrganizationSeparation of Ownership and ManagementThe Goal of ManagementMarket Discipline: TakeoversThe Role of the Finance Specialist in a CorporationSummaryFinance is the study of how to allocate scarce resources over time. The two features that distinguish finance are that the costs and benefits of financial decisions are spread out over time and are usually not known with certainty in advance by either the decision-maker or anybody else.A basic tenet of finance is that the ultimate function of the system is to satisfy people’s consumption preferences. Economic organizations such as firms and governments exist in order to facilitate the achievement of that ultimate function. Many financial decisions can be made strictly on the basis of improving the tradeoffs available to people without knowledge of their consumption preferences.There are at least five good reasons to study finance:To manage your personal resources.To deal with the world of business.To pursue interesting and rewarding career opportunities.To make informed public choices as a citizen.To expand your mind.The players in finance theory are households and business firms. Households occupy a special place in the theory because the ultimate function of the system is to satisfy the preferences of people, and the theory treats those preferences as given.Finance theory explains household behavior as an attempt to satisfy those preferences. The behavior of firms is viewed from the perspective of how it affects the welfare of households.Households face four basic types of financial decisions:Saving decisions: How much of their current income should they save for the future?Investment decisions: How should they invest the money they have saved?Financing decisions: When and how should they use other people’s money to satisfy their wants and needs?Risk management decisions: How and on what terms should they seek to reduce the economic uncertainties they face or to take calculated risks?There are three main areas of financial decision-making in a business: capital budgeting, capital structure, and working capital management.There are five reasons for separating the management from the ownership of a business enterprise:Professional managers may be found who have a superior ability to run the business.To achieve the efficient scale of a business the resources of many households may have to be pooled.In an uncertain economic environment, owners will want to diversify their risks across many firms. Such efficient diversification is difficult to achieve without separation of ownership and management.Savings in the costs of gathering information.The “learning curve” or “going concern” effect. When the owner is also the manager, the new owner has to learn the business from the old owner in order to manage it efficiently. If the owner is not the manager, then when the business is sold, the manager continues in place and works for the new owner.The corporate form is especially well suited to the separation of ownership and management of firms because it allows relatively frequent changes in owners by share transfer without affecting the operations of the firm.The primary goal of corporate management is to maximize shareholder wealth. It leads managers to make the same investment decisions that each of the individual owners would have made had they made the decisions themselves.A competitive stock market imposes a strong discipline on managers to take actions to maximize the market value of the firm’s shares.Solutions to Problems at End of Chapter1. What are your main goals in life? How does finance play a part in achieving those goals? What are the major trade-offs you face?SAMPLE ANSWER:Finish schoolGet good paying job which I likeGet married and have childrenOwn my own homeProvide for familyPay for children’s educationRetireHow Finance Plays a Role:SAMPLE ANSWER:Finance helps me pay for undergraduate and graduate education and helps me decide whether spending the money on graduate education will be a good investment decision or not.Higher education should enhance my earning power and ability to obtain a job I like.Once I am married and have children I will have additional financial responsibilities (dependents) and I will have to learn how to allocate resources among individuals in the household and learn how to set aside enough money to pay for emergencies, education, vacations etc. Finance also helps me understand how to manage risks such as for disability, life and health.Finance helps me determine whether the home I want to buy is a good value or not. The study of finance also helps me determine the cheapest source of financing for the purchase of that home.Finance helps me determine how much money I will have to save in order to pay for my children’s education as well as my own retirement.Major Trade-Offs:SAMPLE ANSWERSpend money now by going to college (and possibly graduate school) but presumably make more money once I graduate due to my higher education.Consume now and have less money saved for future expenditures such as for a house or car OR save more money now but consume less than some of my friends.2. What is your net worth? What have you included among your assets and your liabilities? What have you excluded that you might have included?SAMPLE ANSWER:$ ____________ (very possibly negative at this point)Assets:Checking account balanceSavings account balanceFurniture/Jewelry (watch)Car (possibly)Liabilities:Student loansCredit card balanceIf renting, remainder of rental agreement (unless subletting is a possibility)Car payments (possibly)Students typically exclude the high value of their potential lifetime earning power when calculating their net worth.3. How are the financial decisions faced by a single person living alone different from those faced by the head of a household with responsibility for several children of school age? Are the tradeoffs they have to make different, or will they evaluate the tradeoffs differently?A single person needs only to support himself and therefore can make every financial decision on his own. If he does not want health insurance (and is willing to bear the financial risks associated with that decision) then no one will be affected by that decision other than that single person. In addition, this person needs to make no decisions about allocating income among dependents. A single person is very mobile and can choose to live almost anywhere. The tradeoffs this individual makes generally concern issues of consuming (or spending) today versus saving for consumption tomorrow. Since this person is supporting only himself, the need to save now is less important than for the head of household discussed next.The head of household with several children must share resources (income) among dependents. This individual must be prepared to deal with risk management issues such as how to be prepared for potential financial emergencies (such as a serious health problem experienced by a member of the family or home owners insurance in case of a fire or other mishap). Because there are more people in this household than with a single person, there are greater risks that someone will getsick or injured. And because there are dependents, the wage earner(s) should think carefully about life and disability insurance. In addition, the family is not as mobile as the single individual. Because of the school age children, the family might want to live near “good schools” thinking that a stronger education will eventually help those children’s future well being and financial situation. Thus, the tradeoffs for the head of household are more complex: more money is needed to consume today (he or she needs to support more dependents), but a lot more money is also needed to save for future expenses such as education and housing and more money is needed for risk management such as life and disability insurance.4. Family A and family B both consist of a father, mother and two children of school age. In family A both spouses have jobs outside the home and earn a combined income of $100,000 per year. In family B, only one spouse works outside the home and earns $100,000 per year. How do the financial circumstances and decisions faced by the two families differ?With two wage earners, there is less risk of a total loss of family income due to unemployment or disability than there is in a single wage earning household. The single wage earning family will probably want more disability and life insurance than the two wage earning family. On the flip side, however, the two wageearning family may need to spend extra money on child care expenses if they need to pay someone to watch the children after school.5. At what age should children be expected to become financially independent?Students will have differing responses to this question depending upon their specific experiences and opinions. Most will probably say independence should come after finishing their education, and they have a decent paying job.6. You are thinking of buying a car. Analyze the decision by addressing the following issues:a.Are there are other ways to satisfy your transportation requirementsbesides buying a car? Make a list of all the alternatives and write down the pros and cons.Takes you directly where you want to goFreeConvenie ntTakes a long timeDestination may be too farTakes you directly to where you want to goFreeConvenie ntRequires physical strength and enduranceDestination may be too farInexpensi veReaches distant destinationsMay not take you directly where you want to goMany stops, not efficientInexpensi veFastMay not take you directly where you want to goLocal destinations onlyReaches distant destinationsMay not take you directly where you want to goAirplan eReachesdistant destinationsFastExpensiveb.What are the different ways you can finance the purchase of a car?Finance through a bank loan or lease, finance through a car dealer with a loan or a lease or finance the car out of your own savings.c.Obtain information from at least three different providers ofautomobile financing on the terms they offer.d.What criteria should you use in making your decision?Your decision will be to select the financing alternative that has the lowest cost to you.When analyzing the information, you should consider the following:Do you have the cash saved to make an outright purchase? What interest rate would you be giving up to make that purchase? Do you pay a different price for the car if you pay cash rather than finance?For differing loan plans, what is the down payment today? What are the monthly payments? For how long? What is the relevant interest rate you will be paying? Does the whole loan get paid through monthly payments or isthere a balloon payment at the end? Are taxes and/or insurance payments included in the monthly payments?For differing lease plans, what is the down payment today? What are the monthly payments? For how long? Do you own the car at the end of the lease? If not, what does it cost to buy the car? Do you have to buy the car at the end of the lease or is it an option? Is there a charge if you decide not to buy the car? What relevant interest rate will you be paying? Are taxes and/or insurance payments included in the monthly payments? Are there mileage restrictions?7. You are thinking of starting your own business, but have no money.a.Think of a business that you could start without having to borrowany money.Any business which involves a student’s own personal service would be cheap to start up. For instance he or she could start a business running errands for others, walking their dogs, shopping etc. Along those same lines they could start some kind of consulting business. Both of these businesses could be run out of their dorm room or their own home and could be started with very little capital. If they wanted to hire additional workers, they would have to be paid on a commission basis to limit upfront expenses.b.Now think of a business that you would want to start if you couldborrow any amount of money at the going market interest rate.Certainly there are many interesting businesses which could be started if one could finance 100% of the business with borrowed capital and no equity. Since you will be able to borrow 100% of the financing, you will be willing to take a lot greater risk than if you were investing your own money.c.What are the risks you would face in this business?[Answer is, of course, dependent on answer to question “b.”]d.Where can you get financing for your new business?Depending upon the size of the financing needed, students should be looking for both debt and equity financing. The sources of this financing ranges from individuals and credit cards (for very small sums) to banks, venture capitalists, public debt and equity markets, insurance companies and pension funds8. Choose an organization that is not a firm, such as a club or church group and list the most important financial decisions it has to make. What are the key tradeoffs the organization faces? What role do preferences play in choosing among alternatives? Interview the financial manager of the organization and check to see if he or she agrees with you.SAMPLE ANSWER:Local Church group. Most important financial decisions:Whether or not to repair damage done to church and grounds during last big hurricane (specifically repairing the leaking roof)What project to put off in order to pay for repair damageHow to pay for renovations to downstairs Sunday school roomsHow to increase member attendance and contributionsHow to organize and solicit volunteers for the annual Church Sale (largest fund raiser of the year)Key Tradeoffs and Preferences:Church group funds are severely limited, so the organization needs to prioritize expenses based upon cost and need. Not all projects that are needed will be undertaken due to the expense involved. An equally large amount of time will be spent trying to raise financing since funds inflow is variable. Since not all projects can be financed, preferences of different important individuals (such as the pastor) take on great significance in the decision-making process.。
金融市场与机构课后答案chapter01

Chapter1Role of Financial Markets and Institutions OutlineOverview of Financial MarketsMoney Versus Capital MarketsPrimary Versus Secondary MarketsOrganized Versus Over-the-Counter MarketsSecurities Traded in Financial MarketsMoney Market SecuritiesCapital Market SecuritiesDerivative SecuritiesValuation of Securities in Financial MarketsMarket Pricing of SecuritiesMarket EfficiencyFinancial Market RegulationDisclosureOther RegulationsFinancial Market GlobalizationRole of the Foreign Exchange MarketForeign Exchange RatesRole of Financial Institutions in Financial MarketsRole of Depository InstitutionsRole of Nondepository InstitutionsComparison of Roles Among Financial InstitutionsOverview of Financial InstitutionsCompetition Between Financial InstitutionsConsolidation of Financial Institutions12E Chapter1/Role of Financial Markets and InstitutionsGlobal Expansion by Financial InstitutionsKey Concepts1.Explain the role of financial intermediaries in transferring funds from surplus units to deficit units.2.Introduce the types of financial markets available and their functions.3.Introduce the various financial institutions that facilitate the flow of funds.4.Provide a preview of the course outline.Emphasize the linkages between the various sections of thecourse.Questions1.Explain the meaning of surplus units and deficit units.Provide an example of each.ANSWER:Surplus units provide funds to the financial markets while deficit units obtain funds from the financial markets.Surplus units include households with savings,while deficit units include firms or government agencies that borrow funds.2.Distinguish between primary and secondary markets.ANSWER:Primary markets are used for the issuance of new securities while secondary markets are used for the trading of existing securities.3.Distinguish between money and capital markets.ANSWER:Money markets facilitate the trading of short-term(money market)instruments while capital markets facilitate the trading of long-term(capital market)instruments.4.Distinguish between perfect and imperfect security markets.ANSWER:With perfect financial markets,all information about any securities for sale would be freely available to investors,information about surplus and deficit units would be freely available, and all securities could be unbundled into any size desired.In reality,markets are imperfect,so that surplus and deficit units do not have free access to information,and securities can not be unbundled as desired.5.Explain why the existence of imperfect markets creates a need for financial institutions.ANSWER:Financial intermediaries are needed to facilitate the exchange of funds between surplus and deficit units.They have the information to provide this service and can even repackage deposits to provide the amount of funds borrowers desire.6.Explain the meaning of efficient markets.Why might we expect markets to be efficient most of thetime?ANSWER:If markets are efficient then prices of securities available in these markets properly reflect all information.We should expect markets to be efficient because if they weren't,investors would capitalize on the discrepancy between what prices are and what they should be.This action would force market prices to represent the appropriate prices as perceived by the market.7.In recent years,several securities firms have been guilty of using inside information when purchasingsecurities,thereby achieving returns well above the norm(even when accounting for risk).Does this suggest that the security markets are not efficient?Explain.ANSWER:Efficiency is often defined with regard to publicly available information.In this case, markets can be efficient,but investors with inside information could possibly outperform the market on a consistent basis.A stronger version of efficiency would hypothesize that even access to inside information will not consistently outperform the market.Chapter1/Role of Financial Markets and Institutions E3 8.What was the purpose of the Securities Act of1933?What was the purpose of the SecuritiesExchange Act of1934?Do these laws prevent investors from making poor investment decisions?Explain.ANSWER:The Securities Act of1933was intended to assure complete disclosure of relevantfinancial information on publicly offered securities,and prevent fraudulent practices when selling these securities.The Securities Exchange Act of1934extended the disclosure requirements tosecondary market issues.It also declared a variety of deceptive practices illegal,but does not prevent poor investments.9.If barriers to international securities markets are reduced,will a country's interest rate be more or lesssusceptible to foreign lending or borrowing activities?Explain.ANSWER:If international securities market barriers are reduced,a country's interest rate will likely become more susceptible to foreign lending and borrowing activities.Without barriers,funds will flow more freely in between countries.Funds would seek out countries where expected returns are high.Then,the amount of foreign funds invested in any country could adjust abruptly and affect interest rates.10.In what way could the international flow of funds cause a decline in interest rates?ANSWER:If a large volume of foreign funds was invested in the United States,it could placedownward pressure on U.S.interest rates.Without this supply of foreign funds,U.S.interest rates would have been higher.11.Distinguish between the functions of a broker and those of a dealer,and explain how each iscompensated.ANSWER:Brokers are commonly compensated with commissions on trades,while dealers arecompensated on their positions in particular securities.Some dealers also provide brokerage services.12.Why is it necessary for securities to be somewhat standardized?ANSWER:Securities can be more easily traded when they are standardized because the specifics of the security transaction are well known.If securities were not standardized,transactions would be slowed considerably as participants would have to negotiate all the provisions.13.What are the functions of securities firms?ANSWER:Securities firms provide a variety of functions(such as underwriting and brokerage)that either enhance a borrower's ability to borrow funds or an investor’s ability to invest funds.14.Explain why some financial flows of funds cannot occur through the sale of standardized securities.ANSWER:Some financial flows,such as most commercial loans,must be provided on a personal basis,since the firms requesting loans have particular needs.15.If securities were not standardized,how would this affect the volume of financial transactionsconducted by brokers?ANSWER:If securities were not standardized,the volume of financial transactions conducted by brokers would be reduced,because the documentation would be greater.mercial banks use some funds to purchase securities and other funds to make loans.Why are thesecurities more marketable than loans in the secondary market?ANSWER:Securities are more standardized than loans and therefore can be more easily sold in the secondary market.The excessive documentation on commercial loans limits a bank's ability to sell loans in the secondary market.17.How have the asset compositions of savings and loan associations differed from those of commercialbanks?Explain why and how this distinction may change over time.ANSWER:Savings and loan associations have traditionally concentrated in mortgage lending,while commercial banks have concentrated in commercial lending.Savings and loan associations are now4E Chapter1/Role of Financial Markets and Institutionsallowed to diversify their asset portfolio to a greater degree and will likely increase theirconcentration in commercial loans(but not to the same degree as commercial banks.18.With regard to the profit motive,how are credit unions different from other financial institutions?ANSWER:Credit unions are non-profit financial institutions.pare the main sources and uses of funds for finance companies,insurance companies,andpension funds.ANSWER:Finance companies sell securities to obtain funds,while insurance companies receive insurance premiums and pension funds receive employee/employer contributions.Finance companies use funds to provide direct loans to consumers and businesses.Insurance companies and pension funds purchase securities.20.What is the function of a mutual fund?Why are mutual funds popular among investors?ANSWER:A mutual fund sells shares to investors,pools the funds,and invests the funds in aportfolio of securities.Mutual funds are popular because they can help individuals diversify while using professional expertise to make investment decisions.21.How does a money market mutual fund differ from a stock or bond mutual fund?ANSWER:A money market mutual fund invests in money market securities,whereas other mutual funds normally invest in stocks or bonds.22.Classify the types of financial institutions mentioned in this chapter as either depository ornondepository.Explain the general difference between depository and nondepository institution sources of funds.ANSWER:Depository institutions include commercial banks,savings and loan associations,and credit unions.These institutions differ from nondepository institutions in that they accept deposits.Nondepository institutions include finance companies,insurance companies,pension funds,mutual funds,and money market funds.23.It is often stated that all types of financial institutions have begun to offer services that werepreviously offered only by certain types.Consequently,many financial institutions are becoming more similar in terms of their operations.Yet,the performance levels still differ significantly among types of financial institutions.Why?ANSWER:Even though financial institutions are becoming more similar,they often differ distinctly from each other in terms of sources and uses of funds.Therefore,their performance levels differ as well.24.Look in a recent business periodical for news about a recent financial transaction that involves twofinancial institutions.For this transaction,determine the following:a.How will each institution's balance sheet be affected?b.Will either institution receive immediate income from the transaction?c.Who is the ultimate user of funds?d.Who is the ultimate source of funds?ANSWER:This exercise will force students to understand how the balance sheet and incomestatement of a financial institution is affected by various transactions.When a financial institution simply acts as a middleman,income(fees or commissions)are earned,but the institution's asset portfolio is not significantly affected.25.Which types of financial institutions do you deal with?Explain whether you are acting as a surplusunit or a deficit unit in your relationship with each financial institution.ANSWER:This exercise allows students to realize that they constantly interact with financialinstitutions,and that they often play the role of a deficit unit(on car loans,tuition loans,etc.).Chapter1/Role of Financial Markets and Institutions E5 26.Explain how the privatization of companies in Europe can lead to the development of new securitiesmarkets.ANSWER:The privatization of companies will force these companies to finance with stocks and debt securities,instead of relying on the federal government for funds.Consequently,secondary markets for stocks and debt securities will be developed over time.Interpreting Financial News“Interpreting Financial News”tests your ability to comprehend common statements made by Wall Street analysts and portfolio managers who participate in the financial markets.Interpret the following statements made by Wall Street analysts and portfolio managers.a.“The price of IBM will not be affected by the announcement that its earnings have increased asexpected.”The earnings level was anticipated by investors,so that IBM’s stock price already reflected this anticipation.b.“The lending operations at Bank of America should benefit from strong economic growth.”High economic growth encourages expansion by firms,which results in a strong demand forloans provided by Bank of America.c.“The brokerage and underwriting performance at Merrill Lynch should benefit from strongeconomic growth.”High economic growth may result in a large volume of stock transactions in which Merrill Lynch may serve as a broker.Also,Merrill Lynch underwriters new securities that are issued whenfirms raise funds to support expansion;firms are more willing to issue new securities to expand during periods of high economic growth.Managing in Financial MarketsAs a financial manager of a large firm,you plan to borrow$70million over the next year.a.What are the more likely alternatives for you to borrow$70million?You could attempt to borrow$70million from commercial banks,savings institutions,or finance companies in the form of commercial loans.Alternatively,you may issue debt securities.b.Assuming that you decide to issue debt securities,describe the types of financial institutions thatmay purchase these securities.Financial institutions such as mutual funds,pension funds,and insurance companies commonly purchase debt securities that are issued by firms.Other financial institutions such as commercial banks and savings institutions may also purchase debt securities.c.How do individuals indirectly provide the financing for your firm when they maintain deposits atdepository institutions,invest in mutual funds,purchase insurance policies,or invest in pensions?Individuals provide funds to financial institutions in the form of bank deposits,investment inmutual funds,purchases of insurance policies,or investment in pensions.The financialinstitutions may channel the funds toward the purchase of debt securities(and even equitysecurities)that were issued by large corporations,such as the one where you work.。
金融英语第一章答案

Chapter1Ⅰ.1. Money and risk and how they are interrelated.2. Recently a number of websites have been created to give consumers basic price comparisons for services.3. Allows a company to determine how much credit it can extend to customers before it begins to have liquidity problems.4. refer to money used by entrepreneurs and businesses to buy what they need to make their products or provide their services or to that sector of the economy based on its operation, i.e., retail, corporate, investment banking.5. A new discipline that uses mathematical and statistical methodology to understand behavioral biases in conjunction with valuation.6. An area of finance dealing with the financial decisions corporations make and the tools and analysis used to make these decisions.7. A main branch of applied mathematics concerned with the financial markets.8. The application of the principles of finance to the monetary decisions of an individual or family unit.Ⅱ.1.maximize risks2. mathematics statistics3. money offering4. determine liquidity5. aggregates accepts6. economics behavioralⅢ.translate the following sentences into English.1.The commercial management is the important aspects of the business management,Do not have the appropriate financial plan, the enterprise is not likely to be successful.2. Financial institutions is the basic aim of the public welcome by the financial assets into they can accept financial assets.3. Enterprise management is risky, so financial manager must evaluate the risks and management.4. Investment decision first refers to the investment opportunity, often referring to capital investment projects.5. Cash budget is often used to assess whether is the enterprise have enough cash to maintain the daily operation of the enterprise operation and if there is too much cash surplus.6. According to the view of finance, capital is the enterprise to the purchase of goods to produce other goods or provide services of currencyⅣ. Translate the following sentences into chinese.1.现金预算非常重要,特别是为小型企业,因为它允许公司确定多少信用可以向客户开始之前就有流动性问题。
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Chapter 1 Why Study Financial Markets and Institutions?1.1 Single Choice1)Financial markets and institutionsA)involve the movement of huge quantities of money.B)affect the profits of businesses.C)affect the types of goods and services produced in an economy.D)do all of the above.E)do only A and B of the above.2)Financial market activities affectA) personal wealth.B) spending decisions by individuals and business firms.C) the economy's location in the business cycle.D) all of the above.3) Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are calledA) commodity markets.B) funds markets.C) derivative exchange markets.D) financial markets.4) The price paid for the rental of borrowed funds (usually expressed as a percentage of the rental of $100 per year) is commonly referred to as theA) inflation rate.B) exchange rate.C) interest rate.D) aggregate price level.5) The bond markets are important becauseA) they are easily the most widely followed financial markets in the United States.B) they are the markets where interest rates are determined.C) they are the markets where foreign exchange rates are determined.D) all of the above.6) Interest rates are important to financial institutions since an interest rate increase _________ the cost of acquiring funds and _________ the income from assets.A) decreases; decreasesB) increases; increasesC) decreases; increasesD) increases; decreases7) Typically, increasing interest ratesA) discourages individuals from saving.B) discourages corporate investments.C) encourages corporate expansion.D) encourages corporate borrowing.E) none of the above.8) Compared to interest rates on long-term U.S. government bonds, interest rates on _________ fluctuate more and are lower on average.A) medium-quality corporate bondsB) low-quality corporate bondsC) high-quality corporate bondsD) three-month Treasury billsE) none of the above9) Compared to interest rates on long-term U.S. government bonds, interest rates on three-month Treasury bills fluctuate _________ and are _________ on average.A) more; lowerB) less; lowerC) more; higherD) less; higher10) The stock market is important becauseA) it is where interest rates are determined.B) it is the most widely followed financial market in the United States.C) it is where foreign exchange rates are determined.D) all of the above.11) Stock prices since the 1950s have beenA) relatively stable, trending upward at a steady pace.B) relatively stable, trending downward at a moderate rate.C) extremely volatile.D) unstable, trending downward at a moderate rate.12) The largest one-day drop in the history of the American stock markets occurred inA) 1929.B) 1987.C) 2000.D) 2001.13) A rising stock market index due to higher share pricesA) increases people's wealth and as a result may increase their willingness to spend.B) increases the amount of funds that business firms can raise by selling newly issued stock.C) decreases the amount of funds that business firms can raise by selling newly issued stock.D) both A and B of the above.14) A declining stock market index due to lower share pricesA) reduces people's wealth and as a result may reduce their willingness to spend.B) increases people's wealth and as a result may increase their willingness to spend.C) decreases the amount of funds that business firms can raise by selling newly issued stock.D) both A and C of the above.E) both B and C of the above.15) Changes in stock pricesA) affect people's wealth and their willingness to spend.B) affect firms' decisions to sell stock to finance investment spending.C) are characterized by considerable fluctuations.D) all of the above.E) only A and B of the above.16) (I) Debt markets are often referred to generically as the bond market. (II) A bond is a security that is a claim on the earnings and assets of a corporation.A) (I) is true, (II) false.B) (I) is false, (II) true.C) Both are true.D) Both are false.17) (I) A bond is a debt security that promises to make payments periodically for a specified period of time. (II) A stock is a security that is a claim on the earnings and assets of a corporation.A) (I) is true, (II) false.B) (I) is false, (II) true.C) Both are true.D) Both are false.18) The price of one country's currency in terms of another's is calledA) the exchange rate.B) the interest rate.C) the Dow Jones industrial average.D) none of the above.19) A stronger dollar benefits _________ and hurts _________A) American businesses; American consumers.B) American businesses; foreign businesses.C) American consumers; American businesses.D) foreign businesses; American consumers.20) A weaker dollar benefits _________ and hurts _________A) American businesses; American consumers.B) American businesses; foreign consumers.C) American consumers; American businesses.D) foreign businesses; American consumers.21)From 1980 to early 1985 the dollar _________ in value, thereby benefiting American _________A) appreciated; businesses.B) appreciated; consumers.C) depreciated; businesses.D) depreciated; consumers.22) Money is defined asA) anything that is generally accepted in payment for goods and services or in the repayment of debt.B) bills of exchange.C) a riskless repository of spending power.D) all of the above.E) only A and B of the above.23) The organization responsible for the conduct of monetary policy in the United States is theA) Comptroller of the Currency.B) U.S. Treasury.C) Federal Reserve System.D) Bureau of Monetary Affairs.24) The central bank of the United States isA) Citicorp.B) The Fed.C) Bank of America.D) The Treasury.E) none of the above.25) Monetary policy is chiefly concerned withA) how much money businesses earn.B) the level of interest rates and the nation's money supply.C) how much money people pay in taxes.D) whether people have saved enough money for retirement.26) Economists group commercial banks, savings and loan associations, credit unions, mutual funds, mutual savings banks, insurance companies, pension funds, and finance companies together under the heading financial intermediaries. Financial intermediariesA) act as middlemen, borrowing funds from those who have saved and lending these funds to others.B) produce nothing of value and are therefore a drain on society's resources.C) help promote a more efficient and dynamic economy.D) do all of the above.E) do only A and C of the above.27) Economists group commercial banks, savings and loan associations, credit unions, mutual funds, mutual savings banks, insurance companies, pension funds, and finance companies together under the heading financial intermediaries. Financial intermediariesA) act as middlemen, borrowing funds from those who have saved and lending these funds to others.B) play an important role in determining the quantity of money in the economy.C) help promote a more efficient and dynamic economy.D) do all of the above.E) do only A and C of the above.28) Banks are important to the study of money and the economy because theyA) provide a channel for linking those who want to save with those who want to invest.B) have been a source of rapid financial innovation that is expanding the alternatives available to those wanting to invest their money.C) are the only financial institution to play a role in determining the quantity of money in the economy.D) do all of the above.E) do only A and B of the above.29) Banks, savings and loan associations, mutual savings banks, and credit unionsA) are no longer important players in financial intermediation.B) have been providing services only to small depositors since deregulation.C) have been adept at innovating in response to changes in the regulatory environment.D) all of the above.E) only A and C of the above.30) (I) Banks are financial intermediaries that accept deposits and make loans. (II) The term "banks" includes firms such as commercial banks, savings and loan associations, mutual savings banks, credit unions, insurance companies, and pension funds. A) (I) is true, (II) false.B) (I) is false, (II) true.C) Both are true.D) Both are false.31) ____ was the stock market's worst one-day drop in history in the 1980s.A) Black FridayB) Black MondayC) Blackout DayD) none of the above32) The largest financial intermediaries areA) insurance companies.B) finance companies.C) banks.D) all of the above.33) In recent yearsA) interest rates have remained constant.B) success of financial institutions have reached levels unprecedented since the Great Depression.C) stock markets have crashed.D) all of the above.34) A securityA) is a claim or price of property that is subject to ownership.B) promises that payments will be made periodically for a specified period of time.C) is the price paid for the usage of funds.D) is a claim on the issuer's future income.35) ____ are considered a financial institutions.A) BanksB) Insurance companiesC) Finance companiesD) Investment banks36) Monetary policy affectsA) interest rates.B) inflation.C) business cycles.D) all of the above.答案:1-5:DDDCB 6-10:BBDAB 11-15:CBDDD 16-20:ACACA21-25:BACBB 26-30:EDECA 31-36:BCCDDD。