Financial Markets And Institutions

by Madura,Jeff

• ISBN13: 9780324288452
• ISBN10: 032428845X
• Edition: 7th
• Format: Hardcover
• Copyright: 2005-01-26
• Publisher: Cengage Learning

Summary

This text describes financial markets and institutions by providing a conceptual framework to understand why markets exist and what their role is in the financial environment. Each type of financial market is described with a focus on its utilization by financial institutions, its internationalization, and recent events that have affected it. Each type of financial institution is described with a focus on its regulatory aspects, management, use of financial markets, and performance. This edition continues its strong tradition of emphasizing timely examples and practical applications, including Internet materials, and offers a unique tie into Internet resources.

Table of Contents

Preface	xxi
Part I Overview of the Financial Environment	1	(78)
CHAPTER 1 Role of Financial Markets and Institutions	2	(23)
Overview of Financial Markets	2	(2)
Types of Financial Markets	3	(1)
Securities Traded in Financial Markets	4	(3)
Money Market Securities	4	(1)
Capital Market Securities	5	(1)
Derivative Securities	5	(2)
Valuation of Securities in Financial Markets	7	(1)
Market Pricing of Securities	7	(1)
Market Efficiency	8	(1)
Impact of Asymmetric Information	9	(1)
Financial Market Regulation	9	(2)
Disclosure	9	(1)
Regulatory Response to Financial Scandals	10	(1)
Other Regulations	10	(1)
Global Financial Markets	11	(2)
How Financial Markets Influence Economic Development	11	(1)
Global Integration	11	(1)
Role of the Foreign Exchange Market	12	(1)
Role of Financial Institutions in Financial Markets	13	(4)
Role of Depository Institutions	13	(1)
Role of Nondepository Financial Institutions	14	(2)
Comparison of Roles among Financial Institutions	16	(1)
Overview of Financial Institutions	17	(4)
Competition between Financial Institutions	18	(1)
Consolidation of Financial Institutions	18	(3)
Global Expansion by Financial Institutions	21	(1)
Summary	21	(1)
Point Counter-Point: Will Computer Technology Cause Financial Intermediaries to Become Extinct?	22	(1)
Questions and Applications	22	(2)
Advanced Questions	23	(1)
Interpreting Financial News	23	(1)
Internet Exercise	23	(1)
Managing in Financial Markets	23	(1)
Flow of Funds Exercise: Roles of Financial Markets and Institutions	24	(1)
WSJ Exercise: Differentiating between Primary and Secondary Markets	24	(1)
CHAPTER 2 Determination of Interest Rates	25	(20)
Loanable Funds Theory	25	(7)
Household Demand for Loanable Funds	25	(1)
Business Demand for Loanable Funds	26	(1)
Government Demand for Loanable Funds	27	(1)
Foreign Demand for Loanable Funds	28	(1)
Aggregate Demand for Loanable Funds	28	(2)
Supply of Loanable Funds	30	(1)
Equilibrium Interest Rate	31	(1)
Economic Forces That Affect Interest Rates	32	(6)
Impact of Economic Growth on Interest Rates	32	(2)
Impact of Inflation on Interest Rates	34	(1)
Impact of the Money Supply on Interest Rates	35	(1)
Impact of the Budget Deficit on Interest Rates	36	(1)
Impact of Foreign Flows of Funds on Interest Rates	36	(2)
Summary of Forces That Affect Interest Rates	38	(1)
Forecasting Interest Rates	38	(3)
Summary	41	(1)
Point Counter-Point: Does a Large Fiscal Budget Deficit Result in Higher Interest Rates?	41	(1)
Questions and Applications	42	(1)
Advanced Questions	42	(1)
Interpreting Financial News	43	(1)
Internet Exercise	43	(1)
Managing in Financial Markets	43	(1)
Problems	43	(1)
Flow of Funds Exercise: How the Flow of Funds Affects Interest Rates	43	(1)
WSJ Exercise: Forecasting Interest Rates	44	(1)
CHAPTER 3 Structure of Interest Rates	45	(34)
Characteristics of Debt Securities That Cause Their Yields to Vary	45	(2)
Credit (Default) Risk	45	(2)
Using the WSJ: Yields across Securities	47	(4)
Liquidity	47	(1)
Tax Status	48	(1)
Term to Maturity	49	(2)
Special Provisions	51	(1)
Explaining Actual Yield Differentials	51	(2)
Yield Differentials of Money Market Securities	51	(1)
Yield Differentials of Capital Market Securities	52	(1)
Estimating the Appropriate Yield	53	(2)
Using the WSJ: Yield Curve	55	(1)
A Closer Look at the Term Structure	55	(15)
Pure Expectations Theory	55	(6)
Liquidity Premium Theory	61	(1)
Segmented Markets Theory	62	(2)
Research on Term Structure Theories	64	(1)
Integrating the Theories of the Term Structure	65	(1)
Uses of the Term Structure	66	(1)
Impact of Debt Management on Term Structure	67	(2)
Historical Review of the Term Structure	69	(1)
International Structure of Interest Rates	70	(1)
Summary	71	(1)
Point Counter-Point: Should a Yield Curve Influence a Borrower's Preferred Maturity of a Loan?	72	(1)
Questions and Applications	72	(2)
Advanced Questions	73	(1)
Interpreting Financial News	73	(1)
Internet Exercise	73	(1)
Managing in Financial Markets	73	(1)
Problems	74	(1)
Flow of Funds Exercise: Influence of the Structure of Interest Rates	75	(1)
WSJ Exercise: Interpreting the Structure of Interest Rates	76	(3)
Part II The Fed and Monetary Policy	79	(50)
CHAPTER 4 Functions of the Fed	80	(20)
Organization of the Fed	80	(4)
Federal Reserve District Banks	81	(1)
Member Banks	81	(1)
Board of Governors	81	(2)
Federal Open Market Committee (FOMC)	83	(1)
Advisory Committees	83	(1)
Integration of Federal Reserve Components	84	(1)
Monetary Policy Tools	84	(8)
Open Market Operations	84	(5)
Adjusting the Discount Rate	89	(1)
Adjusting the Reserve Requirement Ratio	90	(1)
Comparison of Monetary Policy Tools	91	(1)
Impact of Technical Factors on Funds	92	(1)
Fed Control of the Money Supply	92	(2)
Limitations of Controlling Money Supply	93	(1)
Monetary Control Act of 1980	94	(1)
Global Monetary Policy	95	(2)
A Single Eurozone Monetary Policy	95	(1)
Global Central Bank Coordination	96	(1)
Summary	97	(1)
Point Counter-Point: Should There Be One Global Central Bank?	98	(1)
Questions and Applications	98	(1)
Interpreting Financial News	98	(1)
Internet Exercise	98	(1)
Managing in Financial Markets	98	(1)
Flow of Funds Exercise: Monitoring the Fed	99	(1)
WSJ Exercise: Reviewing Fed Policies	99	(1)
CHAPTER 5 Monetary Theory and Policy	100	(29)
Monetary Theory	100	(6)
Pure Keynesian Theory	100	(4)
Quantity Theory and the Monetarist Approach	104	(1)
Theory of Rational Expectations	105	(1)
Which Theory Is Correct?	106	(1)
Tradeoff Faced by the Fed	106	(4)
Impact of Other Forces on the Tradeoff	107	(3)
Economic Indicators Monitored by the Fed	110	(3)
Indicators of Economic Growth	111	(1)
Indicators of Inflation	111	(1)
How the Fed Uses Indicators	112	(1)
Index of Leading Economic Indicators	112	(1)
Lags in Monetary Policy	113	(1)
Assessing the Impact of Monetary Policy	114	(4)
Forecasting Money Supply Movements	114	(2)
Forecasting the Impact of Monetary Policy	116	(2)
Integrating Monetary and Fiscal Policies	118	(3)
History	118	(1)
Monetizing the Debt	119	(1)
Market Assessment of Integrated Policies	120	(1)
Global Effects of Monetary Policy	121	(2)
Impact of the Dollar	121	(1)
Impact of Global Economic Conditions	121	(1)
Transmission of Interest Rates	122	(1)
Fed Policy during the Asian Crisis	122	(1)
Summary	123	(1)
Point Counter-Point: Can the Fed Prevent U.S. Recessions?	123	(1)
Questions and Applications	124	(1)
Advanced Questions	124	(1)
Interpreting Financial News	125	(1)
Internet Exercise	125	(1)
Managing in Financial Markets	125	(1)
Flow of Funds Exercise: Anticipating Fed Actions	125	(1)
WSJ Exercise: Market Assessment of Fed Policy	125	(1)
Part II Integrative Problem and Watching	126	(3)
Part III Debt Security Markets	129	(122)
CHAPTER 6 Money Markets	130	(27)
Money Market Securities	130	(13)
Treasury Bills	131	(3)
Commercial Paper	134	(5)
Negotiable Certificates of Deposit (NCDs)	139	(1)
Repurchase Agreements	140	(1)
Federal Funds	140	(1)
Banker's Acceptances	141	(2)
Institutional Use of Money Markets	143	(1)
Valuation of Money Market Securities	144	(3)
Explaining Money Market Price Movements	145	(1)
Efficiency of Money Market Securities	146	(1)
Indicators of Future Money Market Security Prices	146	(1)
Risk of Money Market Securities	147	(1)
Measuring Risk	147	(1)
Interaction among Money Market Yields	148	(1)
Globalization of Money Markets	148	(2)
Using the WSJ: Money Market Rates	150	(3)
Eurodollar Deposits and Euronotes	150	(2)
Euro-Commercial Paper	152	(1)
Performance of Foreign Money Market Securities	152	(1)
Summary	153	(1)
Point Counter-Point: Should Firms Invest in Money Market Securities?	154	(1)
Questions and Applications	154	(1)
Advanced Questions	154	(1)
Interpreting Financial News	155	(1)
Internet Exercise	155	(1)
Managing in Financial Markets	155	(1)
Problems	155	(1)
Flow of Funds Exercise: Financing in the Money Markets	156	(1)
WSJ Exercise: Assessing Yield Differentials of Money Market Securities	156	(1)
CHAPTER 7 Bond Markets	157	(26)
Background on Bonds	157	(1)
Bond Yields	157	(1)
Treasury and Federal Agency Bonds	158	(3)
Treasury Bond Auction	158	(1)
Trading Treasury Bonds	159	(1)
Treasury Bond Quotations	160	(1)
Using the WSJ: Government Bond Price Quotations	161	(2)
Stripped Treasury Bonds	162	(1)
Inflation-Indexed Treasury Bonds	162	(1)
Savings Bonds	163	(1)
Federal Agency Bonds	163	(1)
Municipal Bonds	163	(1)
Credit Risk	163	(1)
Using the WSJ: Government Agency & Similar Issues	164	(3)
Characteristics of Municipal Bonds	165	(1)
Trading and Quotations	166	(1)
Yields Offered on Municipal Bonds	166	(1)
Corporate Bonds	167	(6)
Corporate Bond Yields and Risk	168	(1)
Private Placements of Corporate Bonds	169	(1)
Characteristics of Corporate Bonds	170	(2)
Trading Corporate Bonds	172	(1)
Corporate Bond Quotations	172	(1)
Using the WSJ: Corporate Bond Price Quotations	173	(4)
Junk Bonds	174	(2)
How Corporate Bonds Facilitate Restructuring	176	(1)
Using the WSJ: Bond Information	177	(1)
Institutional Use of Bond Markets	178	(1)
Globalization of Bond Markets	178	(2)
Eurobond Market	179	(1)
Summary	180	(1)
Point Counter-Point: Should Financial Institutions Invest in Junk Bonds?	180	(1)
Questions and Applications	180	(2)
Advanced Questions	181	(1)
Interpreting Financial News	181	(1)
Internet Exercise	181	(1)
Managing in Financial Markets	181	(1)
Problems	182	(1)
Flow of Funds Exercise: Financing in the Bond Markets	182	(1)
WSJ Exercise: Impact of Treasury Financing on Bond Prices	182	(1)
CHAPTER 8 Bond Valuation and Risk	183	(39)
Bond Valuation Process	183	(4)
Bond Valuation with a Present Value Table	184	(1)
Impact of the Discount Rate on Bond Valuation	185	(1)
Impact of the Timing of Payments on Bond Valuation	185	(1)
Valuation of Bonds with Semiannual Payments	186	(1)
Use of Annuity Tables for Valuation	186	(1)
Relationships between Coupon Rate, Required Return, and Bond Price	187	(3)
Implications for Financial Institutions	188	(2)
Explaining Bond Price Movements	190	(6)
Factors That Affect the Risk-Free Rate	190	(2)
Factors That Affect the Credit (Default) Risk Premium	192	(3)
Summary of Factors Affecting Bond Prices	195	(1)
Bond Market Efficiency	196	(1)
Sensitivity of Bond Prices to Interest Rate Movements	196	(6)
Bond Price Elasticity	196	(2)
Duration	198	(4)
Bond Investment Strategies Used by Investors	202	(1)
Matching Strategy	202	(1)
Laddered Strategy	202	(1)
Barbell Strategy	202	(1)
Interest Rate Strategy	203	(1)
Return and Risk of International Bonds	203	(1)
Influence of Foreign Interest Rate Movements	203	(1)
Using the WSJ: Total Rates of Return on International Bonds	204	(2)
Influence of Credit Risk	204	(1)
Influence of Exchange Rate Fluctuations	204	(1)
International Bond Diversification	205	(1)
Summary	206	(1)
Point Counter-Point: Does Governance of Firms Affect the Prices of Their Bonds?	206	(1)
Questions and Applications	206	(3)
Advanced Questions	207	(1)
Interpreting Financial Nevus	208	(1)
Internet Exercise	208	(1)
Managing in Financial Markets	208	(1)
Problems	209	(2)
Flow of Funds Exercise: Interest Rate Expectations, Economic Growth, and Bond Financing	211	(1)
CNN Video Questions	211	(1)
WSJ Exercise: Comparing Bond Price Sensitivity among Bonds	211	(1)
APPENDIX 8 Forecasting Bond Prices and Yields	212	(10)
CHAPTER 9 Mortgage Markets	222	(29)
Background on Mortgages	222	(2)
Types of Mortgages	222	(2)
Residential Mortgage Characteristics	224	(4)
Insured versus Conventional Mortgages	224	(1)
Fixed-Rate versus Adjustable-Rate Mortgages	224	(2)
Mortgage Maturities	226	(2)
Creative Mortgage Financing	228	(1)
Graduated-Payment Mortgage (GPM)	228	(1)
Growing-Equity Mortgage	228	(1)
Second Mortgage	228	(1)
Shared-Appreciation Mortgage	228	(1)
Institutional Use of Mortgage Markets	229	(3)
Financial Institutions That Originate Mortgages	229	(1)
Participation in the Secondary Market	229	(1)
Institutional Investors in Mortgages	230	(1)
Unbundling of Mortgage Activities	231	(1)
Valuation of Mortgages	232	(1)
Using the WSJ: Mortgage Market Information	232	(5)
Factors That Affect the Risk-Free Interest Rate	233	(2)
Factors That Affect the Risk Premium	235	(1)
Summary of Factors Affecting Mortgage Prices	235	(1)
Indicators of Changes in Mortgage Prices	236	(1)
Risk from Investing in Mortgages	237	(4)
Interest Rate Risk	237	(1)
Prepayment Risk	237	(1)
Credit Risk	238	(1)
Measuring Risk	239	(2)
Mortgage-Backed Securities	241	(3)
Mortgage Pass-Through Securities	241	(1)
Types of Mortgage Pass-Through Securities	242	(2)
Mortgage-Backed Securities for Small Investors	244	(1)
Globalization of Mortgage Markets	244	(1)
Summary	245	(1)
Point Counter-Point: Is the Trading of Mortgages Similar to the Trading of Corporate Bonds?	245	(1)
Questions and Applications	245	(2)
Advanced Questions	246	(1)
Interpreting Financial News	246	(1)
Internet Exercise	246	(1)
Managing in Financial Markets	246	(1)
Problem	247	(1)
Flow of Funds Exercise: Mortgage Financing	247	(1)
WSJ Exercise: Explaining Mortgage Rate Premiums	247	(1)
Part III Integrative Problem asset Allocation	248	(3)
Part IV Equity Markets	251	(110)
CHAPTER 10 Stock Offerings and Investor Monitoring	252	(38)
Background on Stock	252	(2)
Ownership and Voting Rights	252	(1)
Preferred Stock	253	(1)
Issuer Participation in Stock Markets	253	(1)
Initial Public Offerings	254	(6)
Process of Going Public	254	(1)
Underwriter Efforts to Ensure Price Stability	255	(2)
Timing of IPOs	257	(1)
Initial Returns of IPOs	257	(1)
Google's IPO	258	(2)
Using the WSJ: IPO Scorecard	260	(2)
Abuses in the IPO Market	260	(1)
Long-Term Performance Following IPOs	261	(1)
Secondary Stock Offerings	262	(1)
Shelf-Registration	263	(1)
Stock Exchanges	263	(4)
Organized Exchanges	263	(2)
Over-the-Counter Market	265	(1)
Extended Trading Sessions	266	(1)
Using the WSJ: After-Hours Trading	267	(3)
Stock Quotations Provided by Exchanges	268	(1)
Stock Index Quotations	269	(1)
Using the WSJ: Stock Information	270	(1)
Using the WSJ: Stock Market Conditions	271	(1)
Investor Participation in the Secondary Market	272	(4)
How Investor Decisions Affect the Stock Price	273	(1)
Types of Investors	274	(2)
Monitoring by Investors	276	(3)
Accounting Irregularities	276	(1)
Sarbanes-Oxley Act	276	(1)
Shareholder Activism	277	(2)
The Corporate Monitoring Role	279	(3)
Stock Repurchases	279	(1)
Market for Corporate Control	280	(1)
Barriers to Corporate Control	281	(1)
Globalization of Stock Markets	282	(2)
Foreign Stock Offerings in the United States	282	(1)
International Placement Process	282	(1)
Global Stock Exchanges	283	(1)
Using the WSJ: Biggest Movers	284	(1)
Emerging Stock Markets	284	(1)
Methods Used to Invest in Foreign Stocks	284	(1)
Summary	285	(1)
Point Counter-Point: Should a Stock Exchange
Enforce Some Governance Standards on the Firms Listed on the Exchange?	286	(1)
Questions and Applications	286	(1)
Advanced Questions	287	(1)
Interpreting Financial News	287	(1)
Internet Exercise	287	(1)
Managing in Financial Markets	287	(1)
Problem	287	(1)
Flow of Funds Exercise: Contemplating an Initial Public Offering (IPO)	288	(1)
CNN Video Questions	288	(1)
WSJ Exercise: Assessing Stock Market Movements	289	(1)
CHAPTER 11 Stock Valuation and Risk	290	(45)
Stock Valuation Methods	290	(4)
Price-Earnings (PE) Method	290	(1)
Dividend Discount Model	291	(2)
Adjusting the Dividend Discount Model	293	(1)
Determining the Required Rate of Return to Value Stocks	294	(2)
Capital Asset Pricing Model	294	(2)
Arbitrage Pricing Model	296	(1)
Factors That Affect Stock Prices	296	(5)
Economic Factors	297	(1)
Market-Related Factors	298	(1)
Firm-Specific Factors	299	(1)
Integration of Factors Affecting Stock Prices	300	(1)
Role of Analysts in Valuing Stocks	301	(2)
Conflicts of Interest	302	(1)
Impact of Disclosure Regulations	302	(1)
Unbiased Analyst Rating Services	302	(1)
Stock Risk	303	(4)
Measures of Risk	303	(4)
Applying Value at Risk	307	(2)
Methods of Determining the Maximum Expected Loss	307	(1)
Deriving the Maximum Dollar Loss	308	(1)
Common Adjustments to the Value-at-Risk Applications	308	(1)
Forecasting Stock Price Volatility and Beta	309	(2)
Methods of Forecasting Stock Price Volatility	309	(1)
Forecasting a Stock Portfolio's Volatility	310	(1)
Forecasting a Stock Portfolio's Beta	310	(1)
Stock Performance Measurement	311	(1)
Sharpe Index	311	(1)
Treynor Index	312	(1)
Stock Market Efficiency	312	(1)
Forms of Efficiency	312	(1)
Using the WSJ: Insider Trading Spotlight	313	(2)
Tests of the Efficient Market Hypothesis	314	(1)
Foreign Stock Valuation, Performance, and Efficiency	315	(2)
Valuation of Foreign Stocks	315	(1)
Measuring Performance from Investing in Foreign Stocks	316	(1)
Performance from Global Diversification	316	(1)
Using the WSJ: Global Stock Market Quotations	317	(2)
International Market Efficiency	319	(1)
Summary	319	(1)
Point Counter-Point: Should the Market Rely on Analysts' Opinions?	320	(1)
Questions and Applications	320	(2)
Advanced Questions	321	(1)
Interpreting Financial News	321	(1)
Internet Exercise	321	(1)
Managing in Financial Markets	321	(1)
Problems	322	(1)
Flow of Funds Exercise: Valuing Stocks	323	(1)
CNN Video Questions	324	(1)
WSJ Exercise: Reviewing Abrupt Shifts in Stock Valuation	324	(1)
APPENDIX 11 The Link between Accounting and Stock Valuation	325	(10)
CHAPTER 12 Market Microstructure and Strategies	335	(26)
Stock Market Transactions	335	(7)
Placing an Order	335	(2)
Margin Trading	337	(2)
Short Selling	339	(1)
Investing in Stock Indexes	340	(2)
Using the WSJ: Exchange Traded Portfolios	342	(1)
How Trades Are Executed	343	(7)
Floor Brokers	343	(1)
Specialists	343	(3)
Effect of the Spread on Transaction Costs	346	(1)
Electronic Communication Networks (ECNs)	347	(2)
Program Trading	349	(1)
Regulation of Stock Trading	350	(4)
Circuit Breakers	351	(1)
Trading Halts	351	(1)
Securities and Exchange Commission (SEC)	352	(2)
How Barriers to International Stock Trading Have Decreased	354	(2)
Reduction in Transaction Costs	354	(1)
Reduction in Information Costs	355	(1)
Reduction in Exchange Rate Risk	355	(1)
Summary	356	(1)
Point Counter-Point: Is a Specialist or a Market-Maker Needed?	356	(1)
Questions and Applications	356	(2)
Advanced Questions	357	(1)
Interpreting Financial News	357	(1)
Internet Exercise	357	(1)
Managing in Financial Markets	357	(1)
Problems	358	(1)
Flow of Funds Exercise: Shorting Stocks	358	(1)
CNN Video Questions	358	(1)
Part IV Integrative Problem Stock Market	359	(2)
Part V Derivative Security Markets	361	(144)
CHAPTER 13 Financial Futures Markets	362	(31)
Background on Financial Futures	362	(2)
Purpose of Trading Financial Futures	362	(1)
Steps Involved in Trading Futures	363	(1)
Interpreting Financial Futures Tables	364	(2)
Valuation of Financial Futures	366	(1)
Impact of the Opportunity Cost	366	(1)
Explaining Price Movements of Bond Futures Contracts	366	(2)
Speculating with Interest Rate Futures	368	(1)
Impact of Leverage	369	(1)
Closing Out the Futures Position	369	(1)
Hedging with Interest Rate Futures	370	(3)
Using Interest Rate Futures to Create a Short Hedge	370	(3)
Using Interest Rate Futures to Create a Long Hedge	373	(1)
Hedging Net Exposure	373	(1)
Bond Index Futures	373	(1)
Using the WSJ: Interest Rate Futures Quotations	374	(1)
Stock Index Futures	375	(5)
Valuing Stock Index Futures Contracts	376	(1)
Speculating with Stock Index Futures	377	(1)
Hedging with Stock Index Futures	378	(1)
Dynamic Asset Allocation with Stock Index Futures	379	(1)
Using the WSJ: Stock Index Futures Quotations	380	(2)
Prices of Stock Index Futures versus Stocks	380	(1)
Arbitrage with Stock Index Futures	381	(1)
Circuit Breakers on Stock Index Futures	381	(1)
Single Stock Futures	382	(1)
Risk of Trading Futures Contracts	383	(2)
Market Risk	384	(1)
Basis Risk	384	(1)
Liquidity Risk	384	(1)
Credit Risk	384	(1)
Prepayment Risk	385	(1)
Operational Risk	385	(1)
Regulation in the Futures Markets	385	(1)
Institutional Use of Futures Markets	386	(1)
Globalization of Futures Markets	387	(1)
Non-U.S. Participation in US. Futures Contracts	387	(1)
Foreign Stock Index Futures	387	(1)
Currency Futures Contracts	388	(1)
Summary	388	(1)
Point Counter-Point: Has the Futures Market Created More Uncertainty for Stocks?	389	(1)
Questions and Applications	389	(2)
Advanced Questions	390	(1)
Interpreting Financial News	390	(1)
Internet Exercise	390	(1)
Managing in Financial Markets	390	(1)
Problems	391	(1)
Flow of Funds Exercise: Hedging with Futures Contracts	391	(1)
WSJ Exercise: Assessing Changes in Futures Prices	392	(1)
CHAPTER 14 Options Markets	393	(44)
Background on Options	393	(3)
Markets Used to Trade Options	394	(1)
How Option Trades Are Executed	395	(1)
Types of Orders	395	(1)
Stock Option Quotations	396	(1)
Speculating with Stock Options	396	(5)
Speculating with Call Options	397	(3)
Speculating with Put Options	400	(1)
Using the WSJ: Most Active Listed Options	401	(1)
Excessive Risk from Speculation	401	(1)
Determinants of Stock Option Premiums	402	(2)
Determinants of Call Option Premiums	403	(1)
Using the WSJ: Long-Term Option Quotations	404	(2)
Determinants of Put Option Premiums	405	(1)
Explaining Changes in Option Premiums	406	(1)
Indicators Monitored by Participants in the Options Market	406	(1)
Hedging with Stock Options	407	(3)
Hedging with Call Options	407	(1)
Hedging with Put Options	408	(2)
Using Options to Measure a Stock's Risk	410	(1)
Options on ETFs and Stock Indexes	410	(2)
Hedging with Stock Index Options	411	(1)
Using the WSJ: Stock Index Option Quotations	412	(2)
Dynamic Asset Allocation with Stock Index Options	412	(1)
Using Index Options to Measure the Market's Risk	413	(1)
Options on Futures Contracts	414	(2)
Speculating with Options on Futures	415	(1)
Using the WSJ: Options on Futures Quotations	416	(1)
Hedging with Options on Futures	417	(3)
Hedging with Options on Interest Rate Futures	417	(1)
Hedging with Options on Stock Index Futures	418	(2)
Institutional Use of Options Markets	420	(1)
Options as Compensation	420	(1)
Globalization of Options Markets	421	(1)
Currency Options Contracts	422	(1)
Summary	422	(1)
Point Counter-Point: If You Were a Major Shareholder of a Publicly Traded Firm, Would You Prefer That Stock Options Be Traded on That Stock?	423	(1)
Questions and Applications	423	(2)
Advanced Questions	424	(1)
Interpreting Financial News	424	(1)
Internet Exercise	424	(1)
Managing in Financial Markets	424	(1)
Problems	425	(2)
Flow of Funds Exercise: Hedging with Options Contracts	427	(1)
WSJ Exercise: Assessing Stock Option Information	427	(1)
APPENDIX 14 Option Valuation	428	(9)
CHAPTER 15 Interest Rate Derivative Markets	437	(24)
Background	437	(2)
Participation by Financial Institutions	439	(1)
Types of Interest Rate Swaps	440	(8)
Plain Vanilla Swaps	440	(2)
Forward Swaps	442	(1)
Callable Swaps	443	(1)
Putable Swaps	443	(1)
Extendable Swaps	444	(1)
Zero-Coupon-for-Floating Swaps	445	(1)
Rate-Capped Swaps	445	(1)
Equity Swaps	446	(1)
Other Types of Swaps	446	(2)
Risks of Interest Rate Swaps	448	(1)
Basis Risk	448	(1)
Credit Risk	448	(1)
Sovereign Risk	449	(1)
Pricing Interest Rate Swaps	449	(1)
Prevailing Market Interest Rates	449	(1)
Availability of Counterparties	450	(1)
Credit and Sovereign Risk	450	(1)
Factors Affecting the Performance of Interest Rate Swaps	450	(1)
Indicators Monitored by Participants in the Swaps Market	450	(1)
Interest Rate Caps, Floors, and Collars	451	(3)
Interest Rate Caps	451	(1)
Interest Rate Floors	452	(1)
Interest Rate Collars	453	(1)
Globalization of Swap Markets	454	(3)
Currency Swaps	455	(1)
Risk of Currency Swaps	456	(1)
Summary	457	(1)
Point Counter-Point: Should Financial Institutions Engage in Interest Rate Swaps for Speculative Purposes?	458	(1)
Questions and Applications	458	(1)
Advanced Questions	459	(1)
Interpreting Financial News	459	(1)
Internet Exercise	459	(1)
Managing in Financial Markets	459	(1)
Problems	459	(1)
Flow of Funds Exercise: Hedging with Interest Rate Derivatives	460	(1)
WSJ Exercise: Impact of Interest Rates on Swap Arrangement	460	(1)
CHAPTER 16 Foreign Exchange Derivative Markets	461	(44)
Background on Foreign Exchange Markets	461	(2)
Institutional Use of Foreign Exchange Markets	461	(1)
Exchange Rate Quotations	462	(1)
Using the WSJ: Foreign Exchange Rate Quotations	463	(2)
Types of Exchange Rate Systems	464	(1)
Factors Affecting Exchange Rates	465	(3)
Differential Inflation Rates	465	(1)
Differential Interest Rates	466	(1)
Central Bank Intervention	466	(1)
Indirect Intervention	467	(1)
Foreign Exchange Controls	468	(1)
Movements in Exchange Rates	468	(1)
Forecasting Exchange Rates	469	(2)
Technical Forecasting	470	(1)
Fundamental Forecasting	470	(1)
Market-Based Forecasting	470	(1)
Mixed Forecasting	471	(1)
Forecasting Exchange Rate Volatility	471	(2)
Speculation in Foreign Exchange Markets	473	(1)
Foreign Exchange Derivatives	473	(2)
Forward Contracts	474	(1)
Using the WSJ: Currency Futures Quotations	475	(2)
Currency Futures Contracts	475	(1)
Currency Swaps	476	(1)
Currency Options Contracts	476	(1)
Using the WSJ: Foreign Exchange Derivatives	477	(3)
Use of Foreign Exchange Derivatives for Speculating	478	(2)
International Arbitrage	480	(2)
Locational Arbitrage	480	(1)
Covered Interest Arbitrage	481	(1)
Explaining Price Movements of Foreign Exchange Derivatives	482	(2)
Indicators of Foreign Exchange Derivative Prices	483	(1)
Summary	484	(1)
Point Counter-Point: Do Financial Institutions Need to Consider Foreign Exchange Market Conditions when Making Domestic Security Market Decisions?	485	(1)
Questions and Applications	485	(1)
Interpreting Financial News	485	(1)
Internet Exercise	486	(1)
Managing in Financial Markets	486	(1)
Problems	486	(1)
Flow of Funds Exercise: Hedging with Foreign Exchange Derivatives	487	(1)
CNN Video Questions	487	(1)
WSJ Exercise: Assessing Exchange Rate Movements	488	(1)
APPENDIX 16A Impact of the Asian Crisis on Foreign Exchange Markets and Other Financial Markets	489	(10)
APPENDIX 16B Currency Option Pricing	499	(4)
Part V Integrative Problem choosing among Derivative Securities	503	(2)
Part VI Commercial Banking	505	(110)
CHAPTER 17 Commercial Bank Operations	506	(25)
Commercial Banks as Financial Intermediaries	506	(1)
Bank Market Structure	506	(3)
Bank Participation in Financial Conglomerates	507	(1)
Impact of the Financial Services Modernization Act	508	(1)
Bank Sources of Funds	509	(6)
Transaction Deposits	509	(1)
Savings Deposits	510	(1)
Time Deposits	510	(1)
Money Market Deposit Accounts	511	(1)
Federal Funds Purchased	512	(1)
Borrowing from the Federal Reserve Banks	512	(1)
Repurchase Agreements	513	(1)
Eurodollar Borrowings	513	(1)
Bonds Issued by the Bank	513	(1)
Bank Capital	514	(1)
Summary of Bank Sources of Funds	514	(1)
Uses of Funds by Banks	515	(8)
Cash	515	(1)
Bank Loans	516	(4)
Investment in Securities	520	(1)
Federal Funds Sold	521	(1)
Repurchase Agreements	521	(1)
Eurodollar Loans	522	(1)
Fixed Assets	522	(1)
Summary of Bank Uses of Funds	522	(1)
Off-Balance Sheet Activities	523	(2)
Loan Commitments	524	(1)
Standby Letters of Credit	524	(1)
Forward Contracts	524	(1)
Swap Contracts	524	(1)
International Banking	525	(1)
Global Competition in Foreign Countries	525	(1)
Expansion by Non-U.S. Banks in the United States	525	(1)
Impact of the Euro on Global Competition	526	(1)
Summary	526	(1)
Point Counter-Point: Should Banks Engage in Other Financial Services Besides Banking?	527	(1)
Questions and Applications	527	(1)
Interpreting Financial News	527	(1)
Internet Exercise	527	(1)
Managing in Financial Markets	528	(1)
Flow of Funds Exercise: Services Provided by Financial Conglomerates	528	(1)
APPENDIX 17 Electronic Funds Transfer	529	(2)
CHAPTER 18 Bank Regulation	531	(26)
Background	531	(1)
Regulatory Structure	532	(1)
Regulatory Overlap	532	(1)
Regulation of Bank Ownership	533	(1)
Deregulation Act of 1980	533	(1)
Gam-St Germain Act	534	(1)
Regulation of Deposit Insurance	534	(1)
Regulation of Capital	535	(4)
Basel Accord	535	(1)
Basel II Accord	536	(2)
Use of the Value-at-Risk Method to Determine Capital Requirements	538	(1)
Regulation of Operations	539	(3)
Regulation of Loans	539	(1)
Regulation of Investment in Securities	539	(1)
Regulation of Securities Services	539	(2)
Regulation of Insurance Services	541	(1)
Regulation of Off-Balance Sheet Transactions	542	(1)
Regulation of the Accounting Process	542	(1)
Regulation of Interstate Expansion	542	(2)
Interstate Banking Act	543	(1)
How Regulators Monitor Banks	544	(5)
Capital Adequacy	544	(1)
Asset Quality	544	(1)
Management	545	(1)
Earnings	545	(1)
Liquidity	545	(1)
Sensitivity	546	(1)
Rating Banh Characteristics	546	(1)
Corrective Action by Regulators	547	(1)
Funding the Closure of Failing Banks	547	(2)
The "Too-Big-to-Fail" Issue	549	(3)
Argument for Government Rescue	550	(1)
Argument against Government Rescue	551	(1)
Proposals for Government Rescue	551	(1)
Global Bank Regulations	552	(2)
Uniform Global Regulations	552	(2)
Summary	554	(1)
Point Counter-Point: Should Regulators Intervene to Take Over Weak Banks?	554	(1)
Questions and Applications	554	(2)
Interpreting Financial News	555	(1)
Internet Exercise	555	(1)
Managing in Financial Markets	555	(1)
Flow of Funds Exercise: Impact of Regulation and Deregulation on Financial Services	556	(1)
WSJ Exercise: Impact of Bank Regulations	556	(1)
CHAPTER 19 Bank Management	557	(36)
Bank Management	557	(1)
Board of Directors	557	(1)
Managing Liquidity	558	(1)
Use of Securitization to Boost Liquidity	558	(1)
Managing Interest Rate Risk	559	(10)
Methods Used to Assess Interest Rate Risk	560	(4)
Determining Whether to Hedge Interest Rate Risk	564	(1)
Methods Used to Reduce Interest Rate Risk	564	(4)
International Interest Rate Risk	568	(1)
Managing Credit Risk	569	(6)
Tradeoff between Credit Risk and Expected Return	569	(2)
Measuring Credit Risk	571	(1)
Diversifying Credit Risk	571	(4)
Managing Market Risk	575	(1)
Measuring Market Risk	575	(1)
Methods Used to Reduce Market Risk	576	(1)
Operating Risk	576	(1)
Managing Risk of International Operations	577	(1)
Exchange Rate Risk	577	(1)
Settlement Risk	577	(1)
Bank Capital Management	578	(1)
Management Based on Forecasts	579	(1)
Bank Restructuring	580	(1)
Bank Acquisitions	581	(1)
Integrated Bank Management	581	(4)
Example	582	(3)
Summary	585	(1)
Point Counter-Point: Can Bank Failures Be Avoided?	585	(1)
Questions and Applications	585	(2)
Advanced Questions	586	(1)
Interpreting Financial News	586	(1)
Internet Exercise	586	(1)
Managing in Financial Markets	587	(1)
Problems	587	(1)
Flow of Funds Exercise: Managing Credit Risk	588	(2)
WSJ Exercise: Bank Management Strategies	590	(1)
APPENDIX 19 Stock Price Reaction to Bank Policies	591	(2)
CHAPTER 20 Bank Performance	593	(22)
Valuation of a Commercial Bank	593	(4)
Factors That Affect Cash Flows	594	(1)
Factors That Affect the Required Rate of Return by Investors	595	(1)
Impact of the September 11 Crisis on Commercial Bank Values	596	(1)
Performance Evaluation of Banks	597	(7)
Interest Income and Expenses	597	(2)
Noninterest Income and Expenses	599	(2)
Net Income	601	(3)
Risk Evaluation of Banks	604	(1)
How to Evaluate a Bank's Performance	605	(3)
Examination of Return on Assets (ROA)	605	(1)
Example	606	(2)
Bank Failures	608	(1)
Reasons for Bank Failure	608	(1)
Summary	609	(1)
Point Counter-Point: Does a Bank's Income Statement Clearly Indicate the Bank's Performance?	610	(1)
Questions and Applications	610	(1)
Interpreting Financial News	610	(1)
Internet Exercise	610	(1)
Managing in Financial Markets	611	(1)
Problem	611	(1)
Flow of Funds Exercise: How the Flow of Funds Affects Bank Performance	611	(1)
WSJ Exercise: Assessing Bank Performance	611	(1)
Part VI Integrative Problem Forecasting Bank Performance	612	(3)
Part VII Nonbank Operations	615	(125)
CHAPTER 21 Thrift Operations	616	(27)
Background on Savings Institutions	616	(3)
Ownership	617	(1)
Regulation of Savings Institutions	618	(1)
Sources and Uses of Funds	619	(3)
Sources of Funds	620	(1)
Uses of Funds	621	(1)
Exposure to Risk	622	(4)
Liquidity Risk	623	(1)
Credit Risk	623	(1)
Interest Rate Risk	624	(2)
Management of Interest Rate Risk	626	(1)
Adjustable-Rate Mortgages (ARMs)	626	(1)
Interest Rate Futures Contracts	626	(1)
Interest Rate Swaps	627	(1)
Conclusions about Interest Rate Risk	627	(1)
Valuation of a Savings Institution	627	(3)
Factors That Affect Cash Flows	627	(1)
Factors That Affect the Required Rate of Return by Investors	628	(2)
Interaction with Other Financial Institutions	630	(1)
Participation in Financial Markets	630	(1)
Performance of Savings Institutions	631	(1)
Performance of Savings Institutions versus Commercial Banks	632	(1)
Savings Institution Crisis	632	(3)
Reasons for Failure	632	(1)
Provisions of the FIRREA	633	(1)
Creation of the RTC	634	(1)
Impact of the Bailout	634	(1)
Performance since the FIRREA	634	(1)
Background on Credit Unions	635	(2)
Ownership of Credit Unions	636	(1)
Advantages and Disadvantages of Credit Unions	636	(1)
Sources and Uses of Credit Union Funds	637	(1)
Sources of Funds	637	(1)
Uses of Funds	637	(1)
Credit Union Exposure to Risk	637	(1)
Liquidity Risk	638	(1)
Credit Risk	638	(1)
Interest Rate Risk	638	(1)
Regulation of Credit Unions	638	(1)
Regulation of State-Chartered Credit Unions	639	(1)
Insurance for Credit Unions	639	(1)
Summary	639	(1)
Point Counter-Point: Can All Savings Institutions Avoid Failure?	640	(1)
Questions and Applications	640	(2)
Interpreting Financial News	641	(1)
Internet Exercise	641	(1)
Managing in Financial Markets	641	(1)
Flow of Funds Exercise: Market Participation by Savings Institutions	642	(1)
WSJ Exercise: Assessing Performance of Savings Institutions	642	(1)
CHAPTER 22 Consumer Finance Operations	643	(12)
Types of Finance Companies	643	(1)
Sources of Finance Company Funds	644	(1)
Loans from Banks	644	(1)
Commercial Paper	644	(1)
Deposits	644	(1)
Bonds	644	(1)
Capital	645	(1)
Uses of Finance Company Funds	645	(1)
Consumer Loans	645	(1)
Business Loans and Leasing	646	(1)
Real Estate Loans	646	(1)
Regulation of Finance Companies	646	(1)
Risks Faced by Finance Companies	647	(1)
Liquidity Risk	647	(1)
Interest Rate Risk	647	(1)
Credit Risk	647	(1)
Captive Finance Subsidiaries	647	(1)
Advantages of Captive Finance Subsidiaries	648	(1)
Valuation of a Finance Company	648	(2)
Factors That Affect Cash Flows	649	(1)
Factors That Affect the Required Rate of Returnby Investors	649	(1)
Interaction with Other Financial Institutions	650	(1)
Participation in Financial Markets	651	(1)
Multinational Finance Companies	652	(1)
Summary	652	(1)
Point Counter-Point: Will Finance Companies Be Replaced by Banks?	652	(1)
Questions and Applications	652	(1)
Interpreting Financial News	653	(1)
Internet Exercise	653	(1)
Managing in Financial Markets	653	(1)
Flow of Funds Exercise: How Finance Companies Facilitate the Flow of Funds	653	(1)
WSJ Exercise: Finance Company Performance	654	(1)
CHAPTER 23 Mutual Fund Operations	655	(34)
Background on Mutual Funds	655	(2)
Types of Funds	656	(1)
Using the WSJ: Closed-End Fund Quotations	657	(6)
Comparison to Depository Institutions	658	(1)
Regulation and Taxation	658	(1)
Information Contained in a Prospectus	659	(1)
Estimating the Net Asset Value	659	(1)
Distributions to Shareholders	659	(1)
Mutual Fund Classifications	660	(1)
Expenses Incurred by Shareholders	660	(2)
Sales Load	662	(1)
12b-1 Fees	663	(1)
Corporate Control by Mutual Funds	663	(1)
Stock Mutual Fund Categories	663	(2)
Growth Funds	664	(1)
Capital Appreciation Funds	664	(1)
Growth and Income Funds	664	(1)
International and Global Funds	664	(1)
Using the WSJ: Mutual Fund Prices and Performance	665	(1)
Specialty Funds	665	(1)
Index Funds	666	(1)
Multifund Funds	666	(1)
Bond Mutual Fund Categories	666	(2)
Income Funds	666	(1)
Tax-Free Funds	667	(1)
High-Yield (Junk) Bond Funds	667	(1)
International and Global Bond Funds	667	(1)
Maturity Classifications	667	(1)
Asset Allocation Funds	668	(1)
Growth and Size of Mutual Funds	668	(2)
Performance of Mutual Funds	670	(4)
Performance of Stock Mutual Funds	670	(1)
Performance of Closed-End Stock Funds	671	(1)
Performance of Bond Mutual Funds	672	(1)
Performance of Closed-End Bond Funds	673	(1)
Performance from Diversifying among Mutual Funds	673	(1)
Research on Stock Mutual Fund Performance	673	(1)
Research on Bond Mutual Fund Performance	674	(1)
Mutual Fund Scandals	674	(1)
Governance of Mutual Funds	675	(1)
Money Market Funds	675	(5)
Asset Composition of Money Market Funds	676	(1)
Maturity of Money Market Funds	676	(1)
Risk of Money Market Funds	676	(3)
Management of Money Market Funds	679	(1)
Regulation and Taxation of Money Market Funds	679	(1)
Using the WSJ: Money Market Fund Quotations	680	(1)
Hedge Funds	680	(2)
Hedge Fund Fees	681	(1)
Regulation	681	(1)
Financial Problems Experienced by Long-Term Capital Management	681	(1)
Real Estate Investment Trusts	682	(1)
Interaction with Other Financial Institutions	683	(1)
Use of Financial Markets	684	(1)
Globalization through Mutual Funds	684	(1)
Summary	685	(1)
Point Counter-Point: Should Mutual Funds Be Subject to More Regulation?	685	(1)
Questions and Applications	685	(2)
Interpreting Financial News	686	(1)
Internet Exercise	686	(1)
Managing in Financial Markets	686	(1)
Flow of Funds Exercise: How Mutual Funds Facilitate the Flow of Funds	687	(1)
CNN Video Questions	687	(1)
WSJ Exercise: Performance of Mutual Funds	688	(1)
CHAPTER 24 Securities Operations	689	(23)
Investment Banking Services	689	(7)
How IBFs Facilitate New Stock Offerings	689	(2)
How IBFs Facilitate New Bond Offerings	691	(2)
How IBFs Facilitate Leveraged Buyouts	693	(1)
How IBFs Facilitate Arbitrage	693	(1)
How IBFs Facilitate Corporate Restructuring	694	(2)
Brokerage Services	696	(2)
Market Orders	696	(1)
Limit Orders	696	(1)
Short Selling	696	(1)
Full-Service versus Discount Brokerage Services	697	(1)
Online Orders	697	(1)
Sources of Income	698	(1)
Income Allocation among Securities Firms	698	(1)
Regulation of Securities Firms	699	(3)
Financial Services Modernization Act	700	(1)
Regulation FD	700	(1)
Rules Regarding Analyst Compensation and Ratings	701	(1)
Rules Preventing Abuses in the IPO Market	701	(1)
Repeal of the Trade-Through Rule	702	(1)
Mutual Fund Disclosure	702	(1)
Risks of Securities Firms	702	(1)
Market Risk	702	(1)
Interest Rate Risk	703	(1)
Credit Risk	703	(1)
Exchange Rate Risk	703	(1)
Valuation of a Securities Firm	703	(2)
Factors That Affect Cash Flows	704	(1)
Factors That Affect the Required Rate of Return by Investors	704	(1)
Interaction with Other Financial Institutions	705	(1)
Participation in Financial Markets	706	(2)
Competition between Securities Firms and Commercial Banks	707	(1)
Globalization of Securities Firms	708	(1)
Growth in International Joint Ventures	708	(1)
Growth in International Securities Transactions	708	(1)
Summary	709	(1)
Point Counter-Point: Should Analysts Be Separated from Investment Banks to Prevent Conflicts of Interest?	709	(1)
Questions and Applications	710	(1)
Interpreting Financial News	710	(1)
Internet Exercise	710	(1)
Managing in Financial Markets	710	(1)
Flow of Funds Exercise: How Investment Banking Facilitates the Flow of Funds	711	(1)
WSJ Exercise: Performance of Securities Firms	711	(1)
CHAPTER 25 Insurance and Pension Fund Operations	712	(28)
Background	712	(1)
Determinants of Insurance Premiums	713	(1)
Investments by Insurance Companies	713	(1)
Life Insurance Operations	713	(5)
Ownership	714	(1)
Types of Life Insurance	714	(1)
Sources of Funds	715	(1)
Uses of Funds	716	(1)
Asset Management of Life Insurance Companies	717	(1)
Property and Casualty Insurance Operations	718	(2)
Cash Flow Underwriting	718	(1)
Uses of Funds	719	(1)
Property and Casualty Reinsurance	719	(1)
Health Care Insurance Operations	720	(1)
Types of Health Care Plans	720	(1)
Managed Health Care Plans	720	(1)
Health Care Insurance in the Future	720	(1)
Business Insurance	721	(1)
Regulation of Insurance Companies	721	(1)
Assessment System	722	(1)
Regulation of Capital	722	(1)
Exposure to Risk	722	(1)
Interest Rate Risk	722	(1)
Credit Risk	723	(1)
Market Risk	723	(1)
Liquidity Risk	723	(1)
Valuation of an Insurance Company	723	(3)
Factors That Affect Cash Flows	724	(1)
Factors That Affect the Required Rate of Return by Investors	725	(1)
Performance Evaluation	726	(1)
Interaction with Other Financial Institutions	726	(2)
Participation in Financial Markets	728	(1)
Multinational Insurance Companies	728	(1)
Background on Pension Funds	729	(1)
Public Pension Funds	729	(1)
Private Pension Plans	729	(1)
Underfunded Pensions	730	(1)
Pension Regulations	730	(1)
The Pension Benefit Guaranty Corporation	731	(1)
Pension Fund Management	731	(2)
Management of Insured versus Trust Portfolios	732	(1)
Management of Portfolio Risk	733	(1)
Corporate Control by Pension Funds	733	(1)
Performance of Pension Funds	733	(2)
Determinants of a Pension Fund's Stock Portfolio Performance	734	(1)
Determinants of a Pension Fund's Bond Portfolio Performance	734	(1)
Performance Evaluation	735	(1)
Performance of Pension Portfolio Managers	735	(1)
Pension Fund Participation in Financial Markets	735	(2)
Summary	737	(1)
Point Counter-Point: Should Defined-Contribution Pension Funds Be Actively Managed?	737	(1)
Questions and Applications	737	(2)
Interpreting Financial News	738	(1)
Internet Exercise	738	(1)
Managing in Financial Markets	738	(1)
Flow of Funds Exercise: How Insurance Companies Facilitate the Flow of Funds	739	(1)
WSJ Exercise: Insurance Company Performance	739	(1)
Part VII Integrative Problem Assessing the Influence of Economic Conditions across a Financial Conglomerate's Units	740	(1)
Appendix A: Comprehensive Project	741	(11)
Appendix B: Using Excel for Statistical Analysis	752	(3)
Glossary	755	(7)
Index	762