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Explore the significance of studying financial markets and institutions, including the flow of funds, impact on personal wealth, and risk management. Learn about bond markets, stock markets, foreign exchange markets, central banks, financial innovation, and more. Discover the basic analytic frameworks and features essential for comprehending the behavior in financial environments.
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Part I Introduction Chapter One WHY STUDY FINANCIAL MARKETS AND INSTITUTIONS?
Why Study Financial Markets? • 1. Channels funds from savers to investors, thereby promoting economic efficiency • 2. Affects personal wealth and behavior of business firms
Why Study Financial Institutions? • 1. Central Banks and the Conduct of Monetary Policy • 2. Structure of the Financial System • Helps get funds from savers to investors • 3. Banks and Other Financial Institutions • 4. Financial Innovation • 5. Managing Risk
How We Study Financial Markets and Institutions • Basic Analytic Framework • 1. Simplified approach to the demand for assets • 2. Concept of equilibrium • 3. Basic supply and demand approach to understand behavior in financial markets, • 4. Search for profits • 5. Transactions cost and asymmetric information approach to financial structure • 6. Aggregate supply and demand analysis
How We Study Financial Markets and Institutions • Features • 1. Case studies • 2. Applications and Numerical Examples • 3. Special Interest Boxes • 4. Following the Financial News boxes • 5. Reading the Wall Street Journal • 6. Practicing Financial Institution Manager applications