Solution Manual for Financial Markets And Institutions 8th Edition Anthony Saunders

8th Edition
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, 8th Edition
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SOLUTION MANUAL FOR
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FinancialMarketsAndInstitutions8thEditionAnthonySaunders
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, 8th Edition
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PartI b




IntroductionandOverviewofFinancialMarkets b b b b b




ChapterOne b




Introduction
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I. Chapter Outline b




1. WhyStudyFinancialMarkets and Institutions? Chapter Overview
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2. Overview of FinancialMarkets b b b




a. PrimaryMarkets versus SecondaryMarkets b b b b




b. MoneyMarkets versus CapitalMarkets b b b b




c. ForeignExchange Markets b b




d. Derivative SecurityMarkets b b




e. FinancialMarket Regulation b b




3. Overview of FinancialInstitutions
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a. UniqueEconomic Functions Performed byFinancialInstitutions
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b. AdditionalBenefits FIs Provide to Suppliers of Funds b b b b b b b




c. EconomicFunctions FIs Provide to the FinancialSystemas a Whole b b b b b b b b b b




d. RisksIncurred by FinancialInstitutions
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e. RegulationofFinancial Institutions b b b




f. Trends inthe United States b b b b




4. Globalizationof Financial Markets and Institutions b b b b b




Appendix 1A: The Financial Crisis: The Failure of Financial Institutions‘ Specialness
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(availablethroughMcGrawHill‘sConnect. Contact your McGrawHillrepresentative for more
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information on making the appendix available to your students).
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II. Learning Goals b




1. Differentiate betweenprimaryand secondarymarkets. b b b b b




2. Differentiate between moneyand capitalmarkets. b b b b b




3. Understand what foreignexchange markets are. b b b b b




4. Understandwhat derivativesecurities markets are. b b b b b




5. Distinguishbetweenthedifferent types offinancialinstitutions.
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6. Knowtheservices financialinstitutionsperform.
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7. Knowtherisks financial institutions face.
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8. Appreciate whyfinancial institutionsare regulated. b b b b b




9. Recognizethat financialmarketsarebecoming increasinglyglobal.
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III. Chapterin Perspective b b




This chapter has three major sections and one minor section. The text provides a general
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overview of the major types of U.S. financial markets, focusing primarily on terminology and
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descriptions of the major securities, market structures and regulators. Market microstructure is
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not discussed. Foreign exchange transactions are also briefly introduced. Second, the chapter
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describes the various types of financial institutions and explains the risks they face and the
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services they provide to funds‘ users and funds‘ suppliers. The financial crisis is discussed and
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the impact of Brexit is considered. The final section of the chapter provides statistics about the
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rapid growth of globalization of bothmarkets and institutions. Anappendix coveringthe details
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ofthe financialcrisis and the government intervention programs, including the costs as of late
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2009, is available through McGraw Hill‘s Connect. Contact your McGraw Hill representative
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for more information on making the appendix available to your students.
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IV. Key Concepts and Definitionsto Communicate to Students
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Financialmarkets b Primarymarkets b




Initialpublic offerings (IPO) b b b Secondary markets b




Derivativesecurity b Liquidity

Moneymarkets b Over-the-counter(OTC) markets b b




Capitalmarkets b Derivativesecuritymarkets b b




Financialinstitutions b Directtransfer b




Pricerisk b Indirecttransfer b




Delegated monitor b Assettransformers b




Diversify Economiesofscale b b




Enterpriserisk management (ERM) b b b




Appendixterms include: b b




TARP FederalReserve Rescue Efforts b b b




FederalStimulus programs b b AmericanInternationalGroup b b




FDIC Bank takeovers b b Otherfinancialinitiatives b b




bOther housing initiatives b b