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 cOF cCONTENTS


Part cI: cMONEY cAND cITS cPRICES.
1. Introduction cand cOverview.
2. Money, cMoney cSupply cand cInterest.
3. Bonds, cLoanable cFunds c& cInterest cRates. c c4.
cInterest cRates cin cMore cDetail.

Part cII: cMONEY cAND cOVERALL cECONOMY.
5. Financial cMarkets cthrough cTime.
6. Aggregate cSupply c& cAggregate cDemand. c c7.
cBanks cand cMoney.


Part cIII: cCENTRAL cBANKS.
8. Central cBanks.
9. Monetary cPolicy cTools.
10. The cMoney cSupply cProcess. c
c11. cMonetary cPolicy c& cDebates.

c Part cIV: cTHE cBANKING cSYSTEM.


12. Bank cManagement.
13. Bank cRisk cManagement c& cPerformance. c c14.
cBanking cRegulation.


Part cV: cFINANCIAL cMARKETS.
15. cMoney cMarkets. c c16.
cBond cMarkets.

17. cStock cMarket c& cEfficiency. c c18.
cMortgage cMarket.

Part cVI: cGLOBAL cFINANCIAL cMARKETS. c c19.
cFX.

20. Global cFinancial cArchitecture. c Part
cVII: cFINANCIAL cINSTITUTIONS.

21. Thrifts cand cFinance cCompanies. c
c22. cInsurance cand cPensions.


23. Mutual cFunds.
24. Investment cBanks cand cPrivate cEquity.

, CHAPTER c2: cMoney, cMoney cSupply, cand cInterest

2-1 Section cReview

1. What cis cthe cdifference cbetween cmoney cand ccurrency? cWhen care cthey cthe
csame? cWhy cmight cthey c bedifferent?




ANS: cMoney cis canything cgenerally caccepted cin cexchange cfor cgoods c& cservices.
cCurrency cis cissued cby c a cbank cor cthe cgovernment, cbut ccurrency cis cnot cnecessarily

cmoney. cThey care cthe csame cwhen cthey care c accepted cin cexchange cfor cgoods cand

cservices. cCurrencies ccan cstop cbeing cmoney cif cpeople cdon’t c acceptthem cin

cexchange cfor cgoods cand cservices. cIf ca cgroup cof cpeople cstop cusing ccurrency cto

cget c goods cand cservices cbut cinstead cuse cbananas, cthen cthe cbananas care cthe

cmoney.


2. How cmany cprices cmust ca cbarter ceconomy chave cif cthe ceconomy chas cfour
cgoods? cWhat cif cit chas c 400goods? cExplain cwhy chaving ca cmoney cin cthe csecond

ccase cis cbeneficial.




ANS: c4 cgoods c= c6 cprices; c400 cgoods c= c79,800 cprices. cMoney callows cus cto
cspecialize cand creduce cour c searchcost. c Money callows cus cto creduce cthe cnumber

cof cstated cprices cwe cneed.


3. You cread ca cnews cstory cabout ca ccountry cthat cis csuffering cfrom crapid, congoing
cincreases cin cthe ccost c ofliving. cWhich ccharacteristic cof cmoney cis cbeing cdirectly
cnegatively cimpacted cin cthat ceconomy?



a. Unit cof caccount
b. Medium cof cexchange
c. Store cof cvalue
d. Double
coincidence cof
c



c wantsANS: cC
2-2 Section cReview

1. Bobby cis cconfused. cHe cstates: c“Since cprisoners care cnot callowed cto csmoke cin
cprisons cany clonger, c Radford’s c cexamples c cof c cigarettes c in c POW c camps c no
c longer c applies.” c How c would c you c explain c to c Bobby chow c cRadford’s c story c

, cdemonstrates c cthe c cconcepts c cof c c the c ccriteria c cof c cmoney, c cas c cwell c as c cthe
c importance cofchanges cin cthe cmoney csupply?



ANS: cAny casset cthat cis cable cto cbe cstandardized, cdivisible, cdurable cand cin cdemand
ccould cbe ccurrency, cas c long c as c it c is c a c medium c of c exchange, c is c a c unit c of

c account c and c has c store c of c value. c Cigarettes c were c money.