FIN 350 Study Guide - Midterm Guide: Interest Rate Parity, Aggregate Demand, Open Market Operation
Document Summary
Midterm review: an overview of financial markets and institutions, direct financial market, ssu and dsu, going directly between on another, intermediaries, goes through banks. Savers tend to save small amounts periodically intermediaries pool small savings into large investments: currency transformation. Intermediaries can buy claims denominated in one currency while issuing claims denominated in another. This would be difficult for most ordinary savers: maturity flexibility, borrowers generally prefer longer-term financing, savers generally prefer shorter-term investments. Intermediaries can offer different ranges of maturities to both: credit risk diversification. Intermediaries manage risk by evaluating and holding many different securities. Governors (and especially the chairman) the president of the ny fed and four remaining 11 regional bank presidents. Funds becomes less costly with institutions already reluctant to face window scrutiny reserve effects depend on whether and to what extent institutions actually go to the. Interest rates affect exchange rates which affect imports and exports.
