- Commercial banks, insurance companies, investment companies, and credit unions are all examples of financial intermediaries that exist because small investors cannot efficiently diversify their portfolios, assess credit risk, or diversify their portfolios and assess credit risk without such institutions.
- In 2012, loans and leases were the most significant financial assets of US commercial banks, while deposits were the most significant liabilities. Bank loans were the least significant liabilities of nonfinancial businesses.
- In terms of total value, the most significant liabilities of US nonfinancial businesses in 2012 were bonds and mortgages, while marketable securities were the least significant financial assets.
Original Description:
review section for bodie investments chapter 1 2 and 3
- Commercial banks, insurance companies, investment companies, and credit unions are all examples of financial intermediaries that exist because small investors cannot efficiently diversify their portfolios, assess credit risk, or diversify their portfolios and assess credit risk without such institutions.
- In 2012, loans and leases were the most significant financial assets of US commercial banks, while deposits were the most significant liabilities. Bank loans were the least significant liabilities of nonfinancial businesses.
- In terms of total value, the most significant liabilities of US nonfinancial businesses in 2012 were bonds and mortgages, while marketable securities were the least significant financial assets.
- Commercial banks, insurance companies, investment companies, and credit unions are all examples of financial intermediaries that exist because small investors cannot efficiently diversify their portfolios, assess credit risk, or diversify their portfolios and assess credit risk without such institutions.
- In 2012, loans and leases were the most significant financial assets of US commercial banks, while deposits were the most significant liabilities. Bank loans were the least significant liabilities of nonfinancial businesses.
- In terms of total value, the most significant liabilities of US nonfinancial businesses in 2012 were bonds and mortgages, while marketable securities were the least significant financial assets.
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financial assets of us commercial option in the open market prior to (Volcker rule)// Direct lending banks in terms of total value income (12;25.5)//expiration ETFs (traded In 2012 deposits were the most significant A put option allows the holder to sell the at large discounts)// First half of liabilities of us commercial banks in terms of the year (.84;.08)//underlying Money asset at the strike price on or total value before the expiration date and sell the market funds management IN 2012 bank loans were the least significant option in the open market prior to companies (to keep expenses)// liabilities of us nonfinancial businesses in expiration Pensions (drop of one terms of total value The capital Nikkei index represents the percentage)// Element In terms of total value, the most significant performance of the Japanese stock market (exploit)// Collapsing commodity liabilities of us nonfinancial businesses in The TSX index represents the (Rose 7%)// Online banks 2012 were bonds and mortgages performance of the Canadian stock market (speeding the process)// In 2012 marketable securities were the least ultimate stock index in the US is the Corporate bonds The (Credit cycle)// significant financial asset of us nonfinancial Wilshireloan; 5000 Cash=cash on hand+bank businesses in terms of total value The DJIA is an example of a US index of Shareholders equity = total assetsInvestors trade previously issued securities in firms to bankloan; Ratio of large real assets the secondary market Bankers acceptances are used extensively total assets = real assets/total The glass-steagall act prohibited banks in the in foreign trade when the creditworthiness assets; After tax rate of return us from both accepting deposits and of one trader is unknown to the trading aftertax income/ investment underwriting securities (yearly income *(1-partnet tax exclusion) The spread between the LIBOR and the US dollar then that * tax rate.AThen yearlydenominated bond that is sold treasury-bill rate is called the TED spread in Singapore is a Eurobond income subtracted by tax amount The sale of a mortgage portfolio by setting up Unsecured bonds are called either then divided by your investment mortgage pass-through securities is an debentures or subordinated debentures purchase example of securitization The trading of stock that was previously Shares purchased= The money market is not a subsector of the issued takes place in the secondary market investment/price per share commodity market, the capital market, the A purchase of a new issue of stock takes Annual dividend income = shares derivatives market, or the equity market place the primary market and usually purchased * dividend perinshare The price of a t-bill in the secondary market is with the assistance of an investment P/E= Share price/EPS the price at which the dealer in t-bills is banker Closing price the day before = willing to buy the bill Firms raise capital by issuing stock Current closing price net change The smallest component of the money market Investment bankers act as intermediaries PWI = (sum of prices at year 0)/ is small-denomination time deposits between issuers of stocks and investors number of stocks Deposits of commercial banks at the FED are and ROR= PWi 1 / PWi 0 act as advisors to companies in called federal funds helping them analyze their financial needs New divisor= [(price of A/1)+ In the event of the firms bankruptcy the most and buyers for newly issued (price of b/1)+(price offind c/2)]/PWI shareholders can lose is their original securities of t-1 investment in the firms stock and the claims Initial index margin requirements are Market value weighted of preferred shareholders are honored before determined by the FED rate of return = VWI= those of the common shareholder A market order is simply an order to buy [(Price of stock a in year t * Preferred dividends are contractual or sell a stock immediately at the quantity)+(price of stock b * obligations prevailing quantity)+.]/[(Price of stockmarket a in price In calculating the s&ps stock price indices, A limitof sell order is where investors year t-1*quantity)+(price stock the adjustement for stock split occurs specify prices at which they are willing to b*quantity)+] * VWI in t-1 automatically security then ROR= VWI ofsell t / aVWI of t-1 Broker calls are funds used by individuals stockror ABC is selling at $50, a limit buy Equally WeightedIfindex who wish to buy stocks on margin and are order may instruct the broker to buy the = [(price of stock a in year t * 1)/ funds borrowed by the broker from the bank stock if and when the share price falls (price of stock a in year t-1)+(price with the agreement to repay the bank belowof $45 of stock b in t *1)/(price stock b immediately if requested to do so cost of buying and selling a stock in t-1)+]/ numberThe of different consists of brokers commissions, dealers Homework multiple choice shares * EWAI in t-1 bid asked spread and a price concession The material wealth of a society is a function of all real assets ROR= EWAI t / EWAI t-1 investor Derivatives and US agencyanbonds are makes financial assets Financial assets indirectly contribute to the countrys productive capacity In 2012, real estate was the most significant real asset of US households in terms of total value In 2012, life insurance reserves was the least significant financial asset of US households in terms of total value In 2012 pension reserves was the most significant financial asset of US households in terms of total value In 2012 mortgages was the most significant liability of US households in terms of total value The largest component of domestic net worth in 2012 was residential real estate The national net worth of the US in 2012 was 48.616 trillion A debt security pays a fixed stream of income or a stream of income that is determined according to a specified formula for the life of the security Money market securities are short term highly marketable generally very low risk and are highly marketable and are generally very low risk A call option on Intel stock and a commodity futures contract are examples of a derivative security Corporate shareholders are best protected from incompetent management decisions by the threat of takeover by other firms Theoretically takeovers should result in improved management and increased stock price The stocks on the dow jones industrial average are changed occasionally as circumstances dictate Municipals offer = Bond yield % *(1-tax rate)
Which of the following
orders is most useful to short sellers who want to limit their potential losses? Stop-buy order Which of the following orders instructs the broker to buy at or below a specified price? Limit buy order Which of the following orders instructs the broker to sell at or above a specified price? Limit sell order Shelf registration is a way of placing issues in the primary market and allows firms to register securities for sale over a two year period A program trade is a coordinated purchase or sale of an entire portfolio of stocks You want to buy 100 shares of hotstock inc at the best possible price as quickly as possible, you will most likely place a market order One outcome from the SEC investigation of the FLASH CRASH of 2010 was approval of new circuit breakers High frequency trading, algorithmic trading, and dark pools are all considered new trading strategies You sell short 100 shares of a stock at a market price of $45 per share. Your maximum possible loss is Rate of return for an initial position is ROR= profit / initial equity, profit = value of stock + dividend loan from unlimited broker interest on loan- initial equity The preliminary prospectus Margin Call = (equity/ value of stock) < .30 is referred to as a red Margin call at ? or lower herring Equivalent taxable yield ($P x 200 5000) < .30 $P x 200 = Rm/(1-t) Call Option Profit = Max(S-X,0)-C, where S is$P x 200 5000 < .30 x $P x 200 the stock price, X is the $P x 200 5000 < $P x 60 strike price, and C is call $P x 200 - $P x 60 < 5000 $P x 140 < 5000 option $P < 5000 Put Option Profit = 140 Max(X-S,0)-P, where S is the stock price, X is the $P < 35.71 Margin call at ? or higher strike price, and P is the put (7500 - $P x 100) < .30 option $P x 100 To find cash or securities to be put into a brokerage 7500 - $P x 100 < .30 x $P x 100 account take the number of7500 < $P x 30 + $P x 100 shares times the price per 7500 < $P x 130 share then multiply that by7500 < $P 130 the brokers initial 57.69 < $P marginal requirement