Fall 2023 Chap 17-18-19-20 FINAL PRESENTATION FOR CLASS

Money

Anything acceptable as payment for goods and services.

Government

Promotes economic growth and stability by controlling the amount of money in circulation.

Banking system

Developed to ease the handling of money.

Good money system

Characteristics include portability, stability, divisibility, scarcity, durability, and recognizability.

Money supply

All of the currency and other liquid instruments in a country's economy.

Federal Reserve System

U.S. central bank responsible for setting interest rates, maintaining financial stability, and managing the country's money supply.

Federal Reserve Banks

12 regional banks spread out across the United States, part of the Federal Reserve System.

Monetary policy

Actions taken by central banks to influence the availability of credit and the money supply.

Fiscal policy

Government's revenue collection and spending decisions.

Open Market Operations

Central bank buying or selling securities in the open market to influence the money supply and interest rates.

Discount Rate

The interest rate that the Federal Reserve charges banks for short-term loans.

Lender of Last Resort

Provides emergency credit to financial institutions that are struggling financially and near collapse.

Time Value of Money

The principle that the value of a dollar today is worth more than the value of a dollar in the future.

American Banking System

Includes depository institutions like commercial banks, savings and loan associations, credit unions, and non-depository institutions like life insurance companies and brokerage firms.

American Banking System

Depository

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American Banking System

Non-Depository

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Pawnshop

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Regulation of Financial Institutions

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The governing body of the Federal Reserve System, an independent governmental agency in charge of conducting monetary policy through open market operations or setting interest rates.

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An independent agency that insures deposits in the event of bank failures, covering deposits up to $250,000 per depositor per member firm.

Securities and Exchange Commission)

A U.S. government oversight agency responsible for regulating the securities markets and protecting investors.

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Oversees the quality and operations of federal credit unions, equivalent to the FDIC for banks.

2010 Dodd-Frank Wall Street Reform and Consumer Protection Act and Volcker Rule

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firms less competitive than their foreign counterparts.

Blockchain

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Securities Markets

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Securities Market

Primary

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Securities Market

Secondary

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Debt vs

It must be repaid.

Investment never has to be repaid.

Stocks

Investors get one vote per share to elect board members and receive dividends.

No voting rights.

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Stock Quotes

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Bond

A corporate certificate indicating that an investor has lent money to a firm (or a government), usually in increments of $1,000.

Coupon rate

The interest rate that an organization that issues bonds is legally obligated to pay to investors on a regular basis.

Face value

The entire bond principal amount that an organization that issues bonds is legally obligated to repay to investors at a prescribed time.

Debenture bonds

Bonds that are not backed by specific collateral.

Secured bonds

Bonds that are backed by collateral, such as land.

Bond market

The market where bonds are bought and sold.

Federal, State, & Local Governments

Entities that can issue bonds.

Federal Government Agencies

Government agencies that can issue bonds.

Corporations

Companies that can issue bonds.

Foreign Governments & Corporations

Foreign governments and companies that can issue bonds.

NYC Bonds

Bonds issued by the city of New York to finance infrastructure projects.

Mayor's Office of Management and Budget

The office responsible for determining and financing infrastructure projects in New York City.

NYC Transitional Finance Authority

An authority responsible for issuing bonds and notes backed by the city of New York.

NYC Municipal Water Finance Authority

An authority responsible for issuing bonds and notes for water infrastructure projects in New York City.

U.S

A bond issued by the federal government, considered the safest type of bond investment.

Treasury bill (T-bill)

A bond that matures in less than a year and is issued with a minimum denomination of $1,000.

Treasury note

A bond that matures in 10 years or less and is sold in denominations of $1,000 up to $1,000,000.

Treasury bond

A bond that matures in 25 years or more and is sold in denominations of $1,000 up to $1,000,000.

Municipal bond

A bond issued by states, cities, counties, and other state and local government agencies, usually exempt from federal taxes.

Yankee bond

A bond issued by a foreign government and payable in U.S. dollars.

Bond Market

The market where corporations issue bonds and bond ratings organizations assess their creditworthiness.

Bond Rating Agencies

Organizations such as Moody's, Standard & Poor's, and Fitch Ratings that assess the creditworthiness of bond issues.

Mutual Funds

Funds that buy stocks, bonds, and other investments and sell shares/securities to the public.

Exchange Traded Funds (ETFs)

Funds that resemble stocks and mutual funds, consisting of a collection of securities that are traded like individual stocks.

Bull Market

A market where stock prices rise by 20% after two declines of 20%, characterized by optimism and investor confidence.

Bear Market

A market where prices decline by more than 20%, accompanied by negative investor sentiment and declining economic prospects.

2008 Financial Crisis

A major financial crisis that occurred in 2008, leading to bailouts and perverse incentives.

Accounting

The process of recording financial transactions, summarizing, analyzing, and reporting them to oversight agencies, regulators, and tax collection entities.

Financial Statements

Statements that provide a snapshot of a corporation's financial health, performance, operations, and cash flow, including the cash flow statement, income statement, and balance sheet.

Balance Sheet

A financial statement that reports a company's assets, liabilities, and shareholder equity at a specific point in time.

Income Statement

A financial statement that reports a company's revenue, expenses, gains, and losses during a specific accounting period.

Cash Flow Statement

A financial statement that aggregates a company's cash inflows and outflows from operations, investing, and financing over a set period of time.

Net Cash Flow

The sum of cash made by the business through operations, investment, and financing.