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Stock Market Analysis and Personal Finance

Stock Market Analysis and Personal Finance. Mr. Bernstein Banking, pp 121-147 March 8, 2013. Stock Market Analysis & Personal Finance Mr. Bernstein. Traditional Role of Banks Individuals (“retail”) deposit savings, earning a return of x%

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Stock Market Analysis and Personal Finance

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  1. Stock Market Analysis and Personal Finance Mr. Bernstein Banking, pp 121-147 March 8, 2013

  2. Stock Market Analysis & Personal Finance Mr. Bernstein Traditional Role of Banks Individuals (“retail”) deposit savings, earning a return of x% Banks loan money to businesses with interest rate x+5% e Banks earn a “spread” of 5% Banks lose money when a loan is not repaid e If they earn a spread of 5% and 1 in 20 loans is not repaid, they do not make money.

  3. Stock Market Analysis & Personal Finance Mr. Bernstein Traditional Role of Banks Banks can “leverage” by loaning out more money than they hold in deposits If a bank with 5% average spread loans out $2 for every $1 in deposits, and 1 in 20 loans is not repaid, they will lose money Government officials regulate the amount of leverage banks may use (“reserve requirements”) This leveraging allows banks to essentially create money and is an important part of a thriving economy

  4. Stock Market Analysis & Personal Finance Mr. Bernstein Types of Personal Banking Financial Services Checking Accounts Savings Accounts CDs Debit Cards Credit Cards Direct Deposit Overdraft Protection Bill Paying ATMs

  5. Stock Market Analysis & Personal Finance Mr. Bernstein Other Financial Services offered by Banks* Personal and Auto Loans Home Mortgages and Home Equity Loans* Investment and Retirement Products* Home, Life and Auto Insurance* *These products and services are typically offered by another division of the bank or even an outside partner. Your local branch office is essentially acting as a sales conduit, making a helpful introduction to another entity.

  6. Stock Market Analysis & Personal Finance Mr. Bernstein Why do banks offer other Services?

  7. Stock Market Analysis & Personal Finance Mr. Bernstein CD rates, 1965- present

  8. Stock Market Analysis & Personal Finance Mr. Bernstein CD rates, 1965- present

  9. Stock Market Analysis & Personal Finance Mr. Bernstein Fed Funds Rate 1952- present

  10. Stock Market Analysis & Personal Finance Mr. Bernstein Interest Rates for Savers Why are rates currently so low? Is it reasonable to assume rates likely to remain low throughout your lifetime? What is the relationship between inflation and interest rates?

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