Solution manual for money banking financial markets institutions 2nd Edition for Brandl Michael

SOLUTION MANUAL
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Money, Banking, Financial Markets & Institutions
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2nd Edition for Brandl Michael, All Chapters 1 - 24
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,TABLE OF CONTENTS q q




Part I: MONEY AND ITS PRICES.
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1. Introduction and Overview. q q


2. Money, Money Supply and Interest. q q q q


3. Bonds, Loanable Funds & Interest Rates. 4.
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Interest Rates in More Detail.
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Part II: MONEY AND OVERALL ECONOMY.
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5. Financial Markets through Time. q q q


6. Aggregate Supply & Aggregate Demand. 7. q q q q qq


Banks and Money.
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Part III: CENTRAL BANKS.
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8. Central Banks. q


9. Monetary Policy Tools. q q


10. The Money Supply Process.
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11. Monetary Policy & Debates.
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Part IV: THE BANKING SYSTEM.
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12. Bank Management. q


13. Bank Risk Management & Performance. 14.
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Banking Regulation.
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Part V: FINANCIAL MARKETS.
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15. Money Markets. 16.
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Bond Markets.
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17. Stock Market & Efficiency. 18.
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Mortgage Market.
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Part VI: GLOBAL FINANCIAL MARKETS. 19.
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FX.
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20. Global Financial Architecture. Part q q q


VII: FINANCIAL INSTITUTIONS.
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21. Thrifts and Finance Companies. q q q q


22. Insurance and Pensions.
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23. Mutual Funds. q


24. Investment Banks and Private Equity. q q q q

, CHAPTER 2: Money, Money Supply, and Interestq q q q q q




2-1 Section Review q




1.What is the difference between money and currency? When are they the
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same? Why might they bedifferent?
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ANS: Money is anything generally accepted in exchange for goods & services.
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Currency is issued by a bank or the government, but currency is not necessarily
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money. They are the same when they are accepted in exchange for goods
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and services. Currencies can stop being money if people don’t acceptthem in
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exchange for goods and services. If a group of people stop using currency to
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get goods and services but instead use bananas, then the bananas are the
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money.
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2.How many prices must a barter economy have if the economy has four
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goods? What if it has 400goods? Explain why having a money in the
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second case is beneficial.
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ANS: 4 goods = 6 prices; 400 goods = 79,800 prices. Money allows us to
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specialize and reduce our searchcost. Money allows us to reduce the number
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of stated prices we need.
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3. You qread qa qnews qstory qabout qa qcountry qthat qis qsuffering qfrom qrapid, qongoing
increases in the cost ofliving. Which characteristic of money is being directly
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negatively impacted in that economy?
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a. Unit of account
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b. Medium of exchange q q



c. Store of value q q



d. Double
coincidence of
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q wantsANS: C q




2-2 Section Review q




1. Bobby qis qconfused. qHe qstates: q“Since qprisoners qare qnot qallowed qto qsmoke qin
prisons any longer, Radford’s examples of cigarettes in POW camps no
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longer applies.” How would you explain to Bobby how Radford’s story
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, q demonstrates the concepts of the criteria of money, as well as the
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q importance ofchanges in the money supply?
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ANS: Any asset that is able to be standardized, divisible, durable and in demand
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could be currency, as long as it is a medium of exchange, is a unit of
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qaccount and has store of value. Cigarettes were money.
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