Study Guides (248,279)
United States (123,309)
Finance (54)
FIN 3636 (6)
All (6)
Final

Final Cheat Sheet

1 Page
134 Views
Unlock Document

Department
Finance
Course
FIN 3636
Professor
All Professors
Semester
Fall

Description
Chapter 3 Yield to MaturityPV analysis most accurate measure of interest ratesEquates todays value with PV of all future paymentsPVx1in PCI Fixed coupon payment iFPP One year discount bond 1 When bond is at par yield equals coupon rate2 Price and yield are negatively related 3Yield greater less than coupon rate when bond price is below par valuediscount premium bondReal interest rateir PiRate of returnCPt1PtPticg icCPtcurrent yield gPt1PtPtcapital gain 1Only bond whose returnyield is on with maturityholding period 2 For bonds with maturityholding period iup P down implying capital loss 3 Longer is maturity geater is price change associated with interest rate change 4 Longer is maturity more return changes with change in interest rate 5 Bond with high initial rate can still have negative return is i up Duration SUMtCP1itSUMCP1it chgPDUR x chg i1iDDUR1iThe duration of a portfolio of securities is the weightedaverage of the durations of the individual securities with the weights equaling the proportion of the portfolio invested in eachChapter 4 YPrice of bonds interest rate negatively X Quantity of bondsFisher effect bond price falls interest rate risesChapter 5 Pure expectations theorybonds of different maturities are perfect substitutesMarket segmentation theorybonds of different maturities are not substitutes at allLiquidity premium theorybonds of different maturities are substitutes but are not perfect substitutesChapter 8Monetary liabilities of the Fed include currency in circulation reservesAssets Government securities discount loans Tools of monetary policy buy and sell treasure securities discount window reserve reqsOMO Dynamic meant to change reserves Defensive meant to offset other factors affecting reserves Advantages 1 Fed has complete control 2 Flexible and precise 3 Easily reversed 4 Implemented quicklyPrimary credit for healthy banksSecondary for troubled banksSeasonal for small regional banks M1 currency outstandingtravelers checkdemand and checkable deposits M2M1svings small time deposits non deposit obligations of depository institutionsM3M2large time depositsother non deposits obligations of depository institutions Chapter 15 Nonbank loans 38 Bonds 32 Bank loans 18 Stocks 11 To solve adverse selection 1 Private production and sale of info 2 Government regulation to increase info 3 Financial intermediation 4 Collateral and net worthFactors causing financial crises 1 Increase in interest rates 2 Increases in uncertainty 3 Asset market effects on balance sheet 4 Government fiscal imbalancesMost US financial crises have begun with a deterioration in banks balance sheetsChapter 16 Types of conflicts of interest underwriting and research in investment banking auditing and consulting in accounting firms credit assessment and consulting in creditrating agencies universal bankingSOX 1 Established PCAOB 2 Prohibited accounting firms from engaging in nonaudit services to a client it is also auditing 3 Members of the boards audit committee must be independent 4 Required the reporting of offbalance sheet activities 5 Appropriated additional funding for the SEC 6 Increased the charges for whitecollar crimes and obstruction GLOBAL LEGAL SETTLEMENT 1 Firms must sever the link bt underwriting and research activities 2 Spinning is banned 3 Firms must make
More Less

Related notes for FIN 3636

Log In


OR

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


OR

By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.


Submit