tailieunhanh - Lecture Financial markets and institutions (4/e) – Chapter 4

Chapter 4 - Valuation of long-term securities. After studying chapter 4, you should be able to: Distinguish among the various terms used to express value, including liquidation value, going-concern value; value bonds, preferred stocks, and common stocks; calculate the rates of return (or yields) of different types of long-term securities; list and explain a number of observations regarding the behavior of bond prices. | Chapter Four The Federal Reserve System, Monetary Policy, and Interest Rates 4- McGraw-Hill/Irwin The Federal Reserve Founded by Congress under the Federal Reserve Act in 1913 Subject to oversight by Congress under its authority to coin money An independent central bank–its decisions do not have to be ratified by the President 4- McGraw-Hill/Irwin Functions of the Federal Reserve Conduct monetary policy Supervise and regulate depository institutions Maintain financial system stability Provide payment and other financial services to the . government, the public, FIs, and foreign official institutions 4- McGraw-Hill/Irwin Structure of the Federal Reserve Divided into 12 Federal Reserve districts, each with a main Federal Reserve Bank Federal Reserve Banks operate under the general supervision of the Board of Governors of the Federal Reserve The Office of the Comptroller of the Currency (OCC) charters national banks, which are members of the Federal Reserve System (FRS) FRS member banks “own” the 12 Federal Reserve Banks 4- McGraw-Hill/Irwin Board of Governors of the FRS Seven member board headquartered in Washington, DC President appoints and Senate confirms members to nonrenewable 14-year terms President appoints and Senate confirms Chairman and vice-chairman to renewable 4-year terms Formulates and conducts monetary policy and supervises and regulates banks 4- McGraw-Hill/Irwin Federal Open Market Committee (FOMC) FOMC consists of 12 members seven members of the Board of Governors the president of the Federal Reserve Bank of NY the presidents of four other Federal Reserve Banks (on a rotating basis) The monetary policy-making body of the FRS Policies seek to promote full employment, economic growth, price stability, and a sustainable pattern of international trade 4- McGraw-Hill/Irwin Federal Open Market Committee (FOMC) The FOMC sets ranges for growth of monetary aggregates and the fed funds rate, and also directs FR operations in FX . | Chapter Four The Federal Reserve System, Monetary Policy, and Interest Rates 4- McGraw-Hill/Irwin The Federal Reserve Founded by Congress under the Federal Reserve Act in 1913 Subject to oversight by Congress under its authority to coin money An independent central bank–its decisions do not have to be ratified by the President 4- McGraw-Hill/Irwin Functions of the Federal Reserve Conduct monetary policy Supervise and regulate depository institutions Maintain financial system stability Provide payment and other financial services to the . government, the public, FIs, and foreign official institutions 4- McGraw-Hill/Irwin Structure of the Federal Reserve Divided into 12 Federal Reserve districts, each with a main Federal Reserve Bank Federal Reserve Banks operate under the general supervision of the Board of Governors of the Federal Reserve The Office of the Comptroller of the Currency (OCC) charters national banks, which are members of the Federal Reserve System (FRS) .