June 7 questions:

Here is a product that will make you wonder how long it will be when textbooks are sold in a similar manner.

Differentiate between the primary and secondary, money and capital, and cash and derivative ways to analyze financial markets. What goods are associated with each?

Why do firms use derivative markets?

Why are money market assets typically more liquid than capital market assets? Does the relative illiquidity of capital market assets have any consequences for the banking system?

What factors explain the need for financial markets? (We discussed four today.) Who is more likely to use a stock broker (ceteris paribus): an active college professor in Alabama or a retired college professor in Florida? Why?

What are the benefits to savers and borrowers if financial markets communicate all available information about financial instruments via their prices?

Here is an interesting recent story about moral hazard. How does U.S. foreign aid promote moral hazard? What are some ways that ailing countries can be helped without creating it?

What factors do savers consider when deciding where to put their money (besides rates of return, of course). What are the reasons for government regulation of financial markets?

Differentiate between Treasury Bills, Treasury Bonds, Treasury Notes, and Treasury Auctions.

Differentiate between a simple loan, an discount loan, a fixed payment loan, and a coupon bond. What are present value calculations?

How does a discount bond differ from a simple loan? What is the main difference between a coupon bond and a fixed payment loan?