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Study sets matching "money banking chapter 11"

110 terms
Money and Banking Chapter 11
Depositors lack of information about t…
The fact that banks operate on a "sequ…
Depositors have a strong incentive to…
Because of asymmetric information, the…
bank panics.
depositors arriving first have the best chance of withdrawing…
sequential service constraint.
contagion effect.
Depositors lack of information about t…
bank panics.
The fact that banks operate on a "sequ…
depositors arriving first have the best chance of withdrawing…
29 terms
Money and Banking Chapter 11
Bank Failure
Contagion Effect
Payoff Method
Purchase and Assumption Method (consol…
bank is unable to meet its obligations to pay its depositors…
the failure of one bank can lead to the failure of others
when the FDIC allows the bank to fail and pays off deposits u…
the FDIC reorganizes the bank, typically by finding a willing…
Bank Failure
bank is unable to meet its obligations to pay its depositors…
Contagion Effect
the failure of one bank can lead to the failure of others
13 terms
money and banking chapter 11
investment banking
underwriting
initial public offering (IPO)
syndicate
financial activities that involve underwriting new security i…
an activity in which an investment bank guarantees to the iss…
the first time a firm sells stock to the public
a group of investment banks that jointly underwrite a securit…
investment banking
financial activities that involve underwriting new security i…
underwriting
an activity in which an investment bank guarantees to the iss…
17 terms
Money & Banking: Chapter 11
Investment Banking
Investment banker activities
Underwriting
Initial Public Offering (IPO)
Financial activities that involve underwriting new security i…
1) Providing advice on new security issues.... 2) Underwriting…
An activity in which an investment bank guarantees to the iss…
The first time a firm sells stock to the public.... -Typically…
Investment Banking
Financial activities that involve underwriting new security i…
Investment banker activities
1) Providing advice on new security issues.... 2) Underwriting…
80 terms
Money and Banking Chapter 11
Investment Banking (IB)
Basis of commercial Banking is...
Investment Banking is mainly concerned…
1. Providing advice on new security is…
financial activities that involve underwriting new security i…
...taking in deposits and making loans.
1. Providing advice on new security issues... 2. Underwriting ne…
-Firms turn to investment banks for advice on how to raise fu…
Investment Banking (IB)
financial activities that involve underwriting new security i…
Basis of commercial Banking is...
...taking in deposits and making loans.
34 terms
Money and Banking Chapter 11
Balance Sheet
Checkable Deposits
Non-transaction Deposits
Borrowings
a list of the bank's assets and liabilities.... Its also a list…
bank accounts that allow the owner of the account to write ch…
the primary source of bank funds. Owners cannot write checks…
Banks can also obtain funds by borrowing from the Federal Res…
Balance Sheet
a list of the bank's assets and liabilities.... Its also a list…
Checkable Deposits
bank accounts that allow the owner of the account to write ch…
24 terms
money and banking chapter 11
need for a safety net
payoff method
purchase and assumption method
adverse selection and the government s…
a government safety net for depositors can short-circuit runs…
the FDIC allows the bank to fail and pays off deposits up to…
the FDIC reorganizes the bank, typically by finding a willing…
the fact that the people who are most likely to produce the a…
need for a safety net
a government safety net for depositors can short-circuit runs…
payoff method
the FDIC allows the bank to fail and pays off deposits up to…
11 terms
money and banking chapter 11
bank failure
leverage ratio
basel accord
financial supervision
a situation in which a bank cannot satisfy its obligations to…
a bank's capital divided by its assets
an agreement that required that banks hold as capital at leas…
overseeing who operates financial institutions and how they a…
bank failure
a situation in which a bank cannot satisfy its obligations to…
leverage ratio
a bank's capital divided by its assets
46 terms
Money and Banking Chapter 11
A decrease in the real money supply, o…
A variable that links the market for g…
According to classical theory, nationa…
According to the Keynesian-cross analy…
upward and to the left.
interest rate
CorrectC. aggregate supply; aggregate demand
decrease equilibrium income by (ΔT)(MPC)/(1 - MPC).
A decrease in the real money supply, o…
upward and to the left.
A variable that links the market for g…
interest rate
57 terms
Money & Banking Chapter 11
Investment Banking
Investment banking activities
Providing Advice on New Security Issues
Underwriting
financial activity that involves under writing new security i…
1. providing advice on new securities... 2. underwriting new sec…
firms turn to investment banks for how to raise funds by issu…
activity in which an investment bank guarantees to the issuin…
Investment Banking
financial activity that involves under writing new security i…
Investment banking activities
1. providing advice on new securities... 2. underwriting new sec…
37 terms
Economics Chapter 11-Money and Banking
barter economy
money
medium of exchange
measure of value
system in which one set of goods or services is exchanged for…
wealth reckoned in terms of money, the most common medium of…
anything that is generally accepted as a standard of value an…
a common denominator that can be used to express worth in ter…
barter economy
system in which one set of goods or services is exchanged for…
money
wealth reckoned in terms of money, the most common medium of…
38 terms
Economics Chapter 11 - Money and Banking
Barter Economy
Money
Medium of Exchange
Measure of Value
A moneyless economy that relies on trade.
Any substance that serves as a medium of exchange, a measure…
Something accepted by all parties as payment for goods and se…
A common denominator that can be used to express worth in ter…
Barter Economy
A moneyless economy that relies on trade.
Money
Any substance that serves as a medium of exchange, a measure…
46 terms
Money and Banking Chapter 11
A decrease in the real money supply, o…
A variable that links the market for g…
According to classical theory, nationa…
According to the Keynesian-cross analy…
upward and to the left.
interest rate
CorrectC. aggregate supply; aggregate demand
decrease equilibrium income by (ΔT)(MPC)/(1 - MPC).
A decrease in the real money supply, o…
upward and to the left.
A variable that links the market for g…
interest rate
31 terms
Money and Banking Chapter 11
investment banking
underwriting
initial public offering
syndicate
financial activities that involve underwriting new security i…
an activity in which an investment bank guarantees to the iss…
the first time a firm sells stock to the public
a group of investment banks that jointly underwrite a securit…
investment banking
financial activities that involve underwriting new security i…
underwriting
an activity in which an investment bank guarantees to the iss…
12 terms
money and banking chapter 11
monetary base (b)
open-market operations
discount loan
discount rate
sum of currency in circulation and bank reserves (B = C + R);…
purchases or sales of securities by a central bank
loan from the Federal Reserve to a bank made at the bank's re…
interest rate on discount loans
monetary base (b)
sum of currency in circulation and bank reserves (B = C + R);…
open-market operations
purchases or sales of securities by a central bank
42 terms
Money, Banking, and Finance: Chapter 11
investment
financial system
financial asset
financial intermediary
the act of redirecting resources from being consumed today so…
the system that allows the transfer of money between savers a…
claim on the property or income of a borrower
institution that helps channel funds from savers to borrowers
investment
the act of redirecting resources from being consumed today so…
financial system
the system that allows the transfer of money between savers a…
34 terms
chapter 11 money and banking
what is the difference between an exog…
explain the difference between general…
what are the main factors that affect…
describe the main factors at play in t…
ex variables are those determined outside of a model. endo ar…
in a partial model, key variables are exogenous. in general m…
costs of use, expectations of spending, risk of loss, opportu…
...
what is the difference between an exog…
ex variables are those determined outside of a model. endo ar…
explain the difference between general…
in a partial model, key variables are exogenous. in general m…
13 terms
Money and Banking Chapter 11
Money Supply
Monetary Base
Open Market Operations
Discount Loans
Currency+checking deposits
Currency+Bank Reserves
purchases or sales of securities of a central bank
Loans from the BOC/Fed to chartered banks
Money Supply
Currency+checking deposits
Monetary Base
Currency+Bank Reserves
Chapter 11: Money and Banking
Mutual funds
In what year did the mutual fund indus…
Finance companies
Which of the following statements is N…
sell shares to savers and purchase assets with the funds
1924
sell commercial paper and securities and make loans to borrow…
They are strictly regulated by state governments
Mutual funds
sell shares to savers and purchase assets with the funds
In what year did the mutual fund indus…
1924
31 terms
money and banking chapter 11
what is the monetary base?
how does the central bank control the…
contractionary monetary policy
expansionary monetary policy
-currency in circulation + bank reserves... -The Fed creates the…
-Open market operations... -contractionary monetary policy... -expa…
-policy designed to reduce the money supply.... -if the Fed sell…
-if the Fed buys securities, this increases bank reserves, ca…
what is the monetary base?
-currency in circulation + bank reserves... -The Fed creates the…
how does the central bank control the…
-Open market operations... -contractionary monetary policy... -expa…
12 terms
Economics Chapter 11 - Money and Banking
Barter Economy
Money
Medium of Exchange
Measure of Value
A moneyless economy that relies on trade.
Any substance that serves as a medium of exchange, a measure…
Something accepted by all parties as payment for goods and se…
A common denominator that can be used to express worth in ter…
Barter Economy
A moneyless economy that relies on trade.
Money
Any substance that serves as a medium of exchange, a measure…
23 terms
Mishkin Money and Banking CH 11
Bank Failure
Contaigion effect
payoff method
purchase and assumption method
bank is unable to meet its obligations to pay its depositors…
the failure of one bank hasten the failures of other banks
the FDIC allows the bank to fail and pays off deposits up to…
the FDIC reorganizes the bank, typically by finding a willing…
Bank Failure
bank is unable to meet its obligations to pay its depositors…
Contaigion effect
the failure of one bank hasten the failures of other banks
37 terms
Economics Chapter 11-Money and Banking
barter economy
money
medium of exchange
measure of value
system in which one set of goods or services is exchanged for…
wealth reckoned in terms of money, the most common medium of…
anything that is generally accepted as a standard of value an…
a common denominator that can be used to express worth in ter…
barter economy
system in which one set of goods or services is exchanged for…
money
wealth reckoned in terms of money, the most common medium of…
26 terms
Chapter 11 Money and Banking (Economics)
Money
Barter
Store of Value
Curreny
Anything that serves as a medium of exchange, a unit of accou…
The direct exchange of one set of goods or services for anoth…
Something that keeps its value if it is stored rather than us…
Coins and paper bills used as money.
Money
Anything that serves as a medium of exchange, a unit of accou…
Barter
The direct exchange of one set of goods or services for anoth…
25 terms
Chapter 11 Money and Banking Econ
Barter economy
Money
Medium of exchange
Measure of value
a moneyless economy that relies on trade, life would be quite…
can be any substance that functions as a medium of exchange,…
money is something generally accepted as payment for goods an…
money expresses worth in terms that most individuals understand
Barter economy
a moneyless economy that relies on trade, life would be quite…
Money
can be any substance that functions as a medium of exchange,…
58 terms
Economics Chapter 11-Money and Banking
barter economy
money
what are the 3 functions of money
medium of exchange
system in which one set of goods or services is exchanged for…
wealth reckoned in terms of money, the most common medium of…
medium of exchange, measure of value, store of value
anything that is generally accepted as a standard of value an…
barter economy
system in which one set of goods or services is exchanged for…
money
wealth reckoned in terms of money, the most common medium of…
56 terms
Economics Chapter 11 - Money and Banking
Barter Economy
Money
Medium of Exchange
Measure of Value
A moneyless economy that relies on trade.
Any substance that serves as a medium of exchange, a measure…
Something accepted by all parties as payment for goods and se…
A common denominator that can be used to express worth in ter…
Barter Economy
A moneyless economy that relies on trade.
Money
Any substance that serves as a medium of exchange, a measure…
24 terms
Chapter 11: Money & Banking (Economics)
Commodity money
Fiat money
Spanish peso
These people divided the dollar into t…
something that has a secondary purpose
paper money made valuable by the gov.
most plentiful coin when the nation began
Benjamin Franklin and Alexander Hamilton
Commodity money
something that has a secondary purpose
Fiat money
paper money made valuable by the gov.
37 terms
Economics Chapter 11-Money and Banking
barter economy
money
medium of exchange
measure of value
system in which one set of goods or services is exchanged for…
wealth reckoned in terms of money, the most common medium of…
anything that is generally accepted as a standard of value an…
a common denominator that can be used to express worth in ter…
barter economy
system in which one set of goods or services is exchanged for…
money
wealth reckoned in terms of money, the most common medium of…
89 terms
Economics, "Money and Banking," Chapter 11
Any good that is widely accepted for p…
1.) Medium of Exchange... 2.) Unit of Ac…
Goods would have to be exchanged or ba…
Exchanging goods and services for othe…
Money
Name the three major functions of money.
What if money didn't exist?
Barter
Any good that is widely accepted for p…
Money
1.) Medium of Exchange... 2.) Unit of Ac…
Name the three major functions of money.
38 terms
Economics Chapter 11 - Money and Banking
Barter Economy
Money
Medium of Exchange
Measure of Value
A moneyless economy that relies on trade.
Any substance that serves as a medium of exchange, a measure…
Something accepted by all parties as payment for goods and se…
A common denominator that can be used to express worth in ter…
Barter Economy
A moneyless economy that relies on trade.
Money
Any substance that serves as a medium of exchange, a measure…
89 terms
Economics, "Money and Banking," Chapter 11
Money
Name the three major functions of money.
What if money didn't exist?
Barter
Any good that is widely accepted for purposes of exchange and…
1.) Medium of Exchange... 2.) Unit of Account... 3.) Store of Value
Goods would have to be exchanged or bartered.
Exchanging goods and services for other goods and services wi…
Money
Any good that is widely accepted for purposes of exchange and…
Name the three major functions of money.
1.) Medium of Exchange... 2.) Unit of Account... 3.) Store of Value
37 terms
Economics Chapter 11-Money and Banking
barter economy
money
medium of exchange
measure of value
system in which one set of goods or services is exchanged for…
wealth reckoned in terms of money, the most common medium of…
anything that is generally accepted as a standard of value an…
a common denominator that can be used to express worth in ter…
barter economy
system in which one set of goods or services is exchanged for…
money
wealth reckoned in terms of money, the most common medium of…
31 terms
Chapter 11: Money, Banking, and Monetary Policy
stock
equity financing
bond
debt financing
a certificate that represents a claim to, or share of, the ow…
the firm's method of raising funds for investment by issuing…
a certificate of indebtedness from the issuer to the bond hol…
a firm's way of raising investment funds by issuing bonds to…
stock
a certificate that represents a claim to, or share of, the ow…
equity financing
the firm's method of raising funds for investment by issuing…
29 terms
Money & Banking Chapter 11 & 12
If financial intermediaries did not ha…
Financial intermediaries, through thei…
Asymmetric information poses two impor…
The usual situation in banking regardi…
Borrowers needing large amounts of money would find it more c…
Increase the amount of trading that occurs in an economy.
Adverse selection, which arises before the transaction occurs…
Borrowers know more than lenders.
If financial intermediaries did not ha…
Borrowers needing large amounts of money would find it more c…
Financial intermediaries, through thei…
Increase the amount of trading that occurs in an economy.
39 terms
ECON 102 Chapter 11: Money and Banking Systems
money:
before money
problem with barter system
4 functions of money
anything that is generally accepted in exchanging goods and s…
-barter system; direct exchange of G & S
-a high transaction cost -> double coincidence of wants... -indi…
1) medium of exchange... 2) unit of account... 3) store of value... 4)…
money:
anything that is generally accepted in exchanging goods and s…
before money
-barter system; direct exchange of G & S
36 terms
Chapter 11 Notes (Money and Banking)
We expect the value of a country's sto…
Financial Institutions perform what fi…
Preapproved loan that can be drawn on…
Offer small investors a low-cost way t…
Larger
Pooling savings, Safekeeping, Providing Liquidity, Diversifyi…
Line of Credit
Mutual Fund Companies
We expect the value of a country's sto…
Larger
Financial Institutions perform what fi…
Pooling savings, Safekeeping, Providing Liquidity, Diversifyi…
89 terms
Economics, "Money and Banking," Chapter 11
Money
Name the three major functions of money.
What if money didn't exist?
Barter
Any good that is widely accepted for purposes of exchange and…
1.) Medium of Exchange... 2.) Unit of Account... 3.) Store of Value
Goods would have to be exchanged or bartered.
Exchanging goods and services for other goods and services wi…
Money
Any good that is widely accepted for purposes of exchange and…
Name the three major functions of money.
1.) Medium of Exchange... 2.) Unit of Account... 3.) Store of Value
20 terms
Principles Of Money Banking and Financial Markets chapter 11
What is not a defining characteristic…
Portfolio diversification is sometimes…
An informational advantage held by one…
In financial markets it is safe to ass…
A) Equilibrium pices
C) don't put all your eggs in one basket
C) Asymmetric information
A) the borrower has more information about the transaction th…
What is not a defining characteristic…
A) Equilibrium pices
Portfolio diversification is sometimes…
C) don't put all your eggs in one basket
77 terms
Ch 11 - Money and Banking
Price - Earnings (PE) Method
Equation for Price - Earnings (PE) Met…
Assumptions made when using the Price-…
Some reasons for different valuations…
Applies the mean price-earnings (PE) ratio based on expected…
Valuation = Expected earning per share X Mean Industry PE ratio
1. Assumes future earning are an important determinant of a f…
1. Investors may use different forecasts for the firm's earni…
Price - Earnings (PE) Method
Applies the mean price-earnings (PE) ratio based on expected…
Equation for Price - Earnings (PE) Met…
Valuation = Expected earning per share X Mean Industry PE ratio
5 terms
Economics 4200 Money & Banking: Chapter 11
Adjustable-rate Mortgages
Financial Derivatives
Securitization
Loophole Mining
- Flexible interest rates keep profits high when rates rise... -…
- Ability to hedge interest rate risk... - Payoffs are linked to…
- To transform otherwise illiquid financial assets into marke…
- Reserve requirements act as a tax on deposits... - Restriction…
Adjustable-rate Mortgages
- Flexible interest rates keep profits high when rates rise... -…
Financial Derivatives
- Ability to hedge interest rate risk... - Payoffs are linked to…
26 terms
ECON: Chapter 11 Money and Banking System
Money
Medium of exchange
Barter
Measure of value
Anything generally accepted in exchange for goods or services
The primary function of money, which is to facilitate transac…
Direct exchange of goods and services without the use of money
Money as a common "ruler" of worth allowing for the compariso…
Money
Anything generally accepted in exchange for goods or services
Medium of exchange
The primary function of money, which is to facilitate transac…
Chapter 11 (10 real terms)- Money and Banking
Bank failure
Leverage ratio
Off-balance-sheet activities
Basel Committee on Banking Supervision
when a bank is unable to meet its obligations to pay its depo…
Capital requirement of banks; (amount of capital)/(total asse…
activities that involve trading financial instruments and gen…
committee decided by banks around the world to regulate them
Bank failure
when a bank is unable to meet its obligations to pay its depo…
Leverage ratio
Capital requirement of banks; (amount of capital)/(total asse…
30 terms
Quiz - Econ. Basics - Chapter 11+ (Financial Markets + Money and Banking)
investment
financial system
mutual fund
diversification
the act of redirecting resources from being consumed today so…
the network of structures and mechanisms that allows the tran…
an organization athat pools the savings of individuals and in…
the stategy of spreading out investments to reduce risk
investment
the act of redirecting resources from being consumed today so…
financial system
the network of structures and mechanisms that allows the tran…
15 terms
Money, Banking, and Financial Markets - Chapter 11
Exogenous Variable
Endogenous Variable
General-Equilibrium Model
Partial-Equilibrium Model
A variable that is determined outside the model or taken to b…
A variable that is determined within the model.
A model in which all the key macroeconomic variables, such as…
A model in which some key macroeconomic variables, such as th…
Exogenous Variable
A variable that is determined outside the model or taken to b…
Endogenous Variable
A variable that is determined within the model.
24 terms
Macroeconomics Chapter 11 Money, Banking, and Finance
barter
deflation liquidity
commodity money
intrinsic value
Exchange goods without involving money.
...
objects that have value in themselves and that are also used…
inherent good not measured by wealth or possessions (everyone…
barter
Exchange goods without involving money.
deflation liquidity
...
13 terms
Chapter 11: Banking, Money and Interest Rates
Medium of Exchange
Financial Intermediaries
Liquidity
Liquidity Ratio
something that is acceptable in exchange for goods and services
the general name for financial institutions (e.g. banks, cred…
the ease by which an asset can be converted into cash without…
the proportion of a bank's total assets held in liquid form
Medium of Exchange
something that is acceptable in exchange for goods and services
Financial Intermediaries
the general name for financial institutions (e.g. banks, cred…
17 terms
Chapter 11 - International Banking and Money Market
Reasons for International Banking
Types of International Banking Offices
Bank Capital Adequacy
Basel III
- low marginal costs... - knowledge advantage... - home country inf…
- correspondent bank... - representative offices... - foreign branc…
the amount of equity capital and other securities a bank hold…
designed to substantially strengthen the regulatory capital f…
Reasons for International Banking
- low marginal costs... - knowledge advantage... - home country inf…
Types of International Banking Offices
- correspondent bank... - representative offices... - foreign branc…
30 terms
ch 11 money and banking
3 functions of money
medium of exchange
measure of value
store of value
medium of exchange, measure of value, and store value
something accepted by all parties as payment for goods and se…
common denominator hat can be used to express worth in term t…
the property that allows purchasing power to be saved until n…
3 functions of money
medium of exchange, measure of value, and store value
medium of exchange
something accepted by all parties as payment for goods and se…
23 terms
Mishkin Money and Banking CH 11
Bank Failure
Contaigion effect
payoff method
purchase and assumption method
bank is unable to meet its obligations to pay its depositors…
the failure of one bank hasten the failures of other banks
the FDIC allows the bank to fail and pays off deposits up to…
the FDIC reorganizes the bank, typically by finding a willing…
Bank Failure
bank is unable to meet its obligations to pay its depositors…
Contaigion effect
the failure of one bank hasten the failures of other banks
1 of 10