Description

Well-known for its engaging, conversational style, this text makes sophisticated concepts accessible, introducing students to how markets and institutions shape the global financial system and economic policy. Principles of Money, Banking & Financial Markets incorporates current research and data while taking stock of sweeping changes in the international financial landscape produced by financial innovation, deregulation, and geopolitical considerations.
It is easy to encourage students to practice with MyEconLab, the online homework and tutorial system. New to the Twelfth Edition, select end-of-chapter exercises from the book are assignable in MyEconLab and preloaded problem sets allow students to practice even if the instructor has not logged in. For more information about how instructors can use MyEconLab, click here.

Features

• In the News boxes highlight key issues from current articles in the financial news.
• Off the Record boxes help students investigate a given topic at a deeper, more analytical level.
• Reading the Financial News boxes offer straightforward, no-nonsense help in interpreting financial charts and tables.
• Going Out on a Limb boxes provide a forum for the authors to offer their own opinions on a topic.
• Every chapter concludes with a summary that recaps the key points, a list of Key Terms with page numbers, and a set of questions that helps student test their grasp of the material.
• Select questions are now assignable in MyEconLab.
• With MyEconLab–an online tutorial and assessment resource–students spend more time doing economics, and instructors spend less time grading.
• Complete integration between the book and MyEconLab: Each new student copy of the Twelfth Edition comes with prepaid access to a MyEconLab course developed specifically to accompany this text. Select end-of-chapter questions are available within MyEconLab, so students can make the most of their study time.
• Learning through practice: For each chapter, students can self-study using the preloaded sample tests and tutorial resources, or they can complete instructor-assigned problems. MyEconLab automatically grades exercises–even graphing problems–so students get instant feedback and personalized Study Plans with links to additional learning tools.
• Online instructor tools: Within MyEconLab, instructors can assign preloaded or customized multiple-choice, graphing, algorithmic, and free-response questions. Exercises are auto-graded, and MyEconLab records the results in an online gradebook to effortlessly track student progress.
• Visit MyEconLab to learn more, take a tour, and request an instructor access code.

New to this Edition

• Select end-of-chapter exercises are now assignable in MyEconLab. For more information visit MyEconLab or see a tour of how instructors use the system.
• New Learning Objectives at the outset of every chapter give students a road map to what they’ll learn.
• New coverage includes:
  • Updated and expanded information on velocity (Chapter 2)
  • Expanded treatment of options (Chapter 3)
  • New coverage on Treasury Inflation Protected Securities (Chapter 8)
  • Revised section discussing balance of payments, appreciation and depreciation, and introducing current accounts and capital accounts (Chapter 10)
  • New section discussing the subprime mortgage crisis (Chapter 12)
  • New coverage on Exchange Traded Funds (Chapter 13)
  • New coverage on FDIC and reimbursement (Chapter 15)
  • Revised coverage of monetary policy, taking into account the current political climate and the Fed’s latest decisions (Chapters 21, 27, 28)
    
• New In the News boxes include topics such as diversifying retirement portfolios, China’s floating exchange rate, moral hazards in the housing market, rising mortgage delinquency rates, and Japan’s liquidity trap.
• New Reading the Financial News boxes include topics such as stock market quotations, financial futures quotations, options quotations, and foreign exchange quotations.
• New Going Out on a Limb boxes include topics such as financial market bubbles and adverse selection.
• A comprehensive update to figures and tables uses the most recent financial data.

Table of Contents

Part I: The Basics
Chapter 1. Introducing Money, Banking, and Financial Markets
An Overview
Why Study Money, Banking, and Financial Markets?
Careers in Banking and Financial Markets

Chapter 2. The Role of Money in the Macroeconomy
Introducing Money
Money, the Economy, and Inflation

Chapter 3. Financial Instruments, Markets, and Institutions
Flow of Funds
Financial Instruments and Markets
Financial Intermediaries: Purposes and Profile


Part II: Financial Instruments and Markets
Chapter 4. Interest Rate Measurement and Behavior
Calculating Interest Rates
What Determines the Level of Interest Rates?

Chapter 5. The Term and Risk Structure of Interest Rates
The Term Structure of Rates and the Yield Curve
Risk and Tax Structure of Rates
Appendix: Bond Price Volatility: Duration Versus Maturity

Chapter 6. The Structure and Performance of Securities Markets
Nature and Function of Securities Markets
Efficiency of Secondary Market Trading
Efficient Capital Markets and Regulation

Chapter 7. The Pricing of Risky Financial Assets
Economic Uncertainty
Principles of Diversification
The Risk Premium on Risky Securities

Chapter 8. Money and Capital Markets
The Government Bond Market
Bank-Related Securities: CDs and Eurodollars
Corporate Securities
Municipal Securities
Mortgage Securities
The Stock Market

Chapter 9. Demystifying Derivatives
An Overview of Financial Futures
An Overview of Options Contracts
An Overview of Swaps

Chapter 10. Understanding Foreign Exchange
What Determines Foreign Exchange Rates?
Fixed Versus Floating Exchange Rates


Part III: Banks and Other Intermediaries
Chapter 11. The Nature of Financial Intermediation
The Economics of Financial Intermediation
The Evolution of Financial Intermediaries in the United States
Financial Intermediaries: Assets, Liabilities, and Management

Chapter 12. Depository Financial Institutions
The Fundamentals of Bank Management
Major Trends in Bank Management
Nonbank Depository Institutions–The Thrifts

Chapter 13. Nondepository Financial Institutions
Insurance Companies and Pension Funds
Mutual Funds
Finance Companies
Securities Brokers and Dealers and Investment Banks
Venture Capital Funds, Mezzanine Debt Funds, and Hedge Funds
Banks Versus Nondepository Institutions


Part IV: Financial System Architecture
Chapter 14. Understanding Financial Contracts
How Business Obtains Financing
The Economics of Financial Contracting

Chapter 15. The Regulation of Markets and Institutions
The Regulation of Financial Markets in the United States
The Regulation of Commercial Banks in the United States  
Regulation of Nondepository Financial Intermediaries
Where Securities Market and Banking Regulation Meet: The Glass-Steagall Act, A Collapsing Barrier

Chapter 16. Financial System Design
Information and Financial System Design
Financial System Design: A Descriptive Summary of Germany, Japan, the United Kingdom, and the United States
Financial System Design and Conflict Resolution: Germany, Japan, the United Kingdom, and the United States
Financial System Design for Eastern Europe and Other Emerging Economies


Part V: The Art of Central Banking
Chapter 17. Who’s in Charge Here?
Formal Structure of the Federal Reserve System
The Realities of Power
The Problem of Federal Reserve Independence

Chapter 18. Bank Reserves and the Money Supply
Check Clearing and Collection
Deposit Expansion: The Single Bank
Deposit Expansion: