Gallaway
ECO 305

Study Guide Test #1
 

To prepare for this test, students should study their text, notes, and homework.  Students should also be prepared to answer questions from articles handed out in class.  To help you get started, here is a list of topics with which you should be familiar.

  • National Debt and who holds it

  • Stocks vs. Bonds

  • Financial Institutions vs. Financial Markets

  •  What is money?

  • What money is not

  • Functions of money

  • Disadvantages of barter

  • Full-bodied money

  • Fiat money

  • Definitive money

  • Representative full-bodied money

  • Evolution of money

  • Measures of money ( including amounts)

  • Liquidity, Risk & Yield

  • Primary vs. Secondary Markets

  • Organized vs. Over the Counter Markets

  • Money vs. Capital markets

  • Risk sharing, liquidity, and information

  • Why study money and money flows?

  • Financial regulation

  • Treasury bills

  • Discounting

  • Treasury Notes and Bonds

  • Coupon Rates

  • Callable Bonds

  • Calculate discount rate of Treasury Bill

  • Calculate Price of Treasury Bill

  • Calculate Yield to Maturity

  • Price vs. Yield

  • Savings Bonds

  • Three ways of issuing bonds & notes

  • Commercial Paper

  • Bankers Acceptance

  • Federal Funds

  • Negotiable CDs

  • Eurodollars

  • Mortgage backed securities

 

  • Financial Intermediaries

  • Financial Instruments

  • Transactions Costs

  • Information and Monitoring Costs

  • Asymmetric Information

  • Moral Hazard

  • Adverse Selection

  • Gresham's Law

  • Principal Agent Problem

  • What functions do financial intermediaries serve?

  • Commercial Banks

  • Thrifts

  • Insurance Companies

  • Types of life insurance companies

  • Term & whole life

  • Finance Companies

  • Money Market Mutual Funds

  • Contractual savings, depository, and Investment institutions

  • 401k's, 403b's, 457b's

  • Glass-Steagall

  • Gramm, Leach, Bliley Financial Services Act

  • Prime rate

  • Real interest rate

  • Significance of Interest Rates

  • Present Value
  • Loanable Funds Model
    • Slope of Curves
    • Why Supply may or may not be Elastic
    • Shifters
    • Uses
  • Bond Supply and Demand
  • Determinants of Nominal Interest Rates
  • Fisher Hypothesis
    • Strong & weak versions
  • Various effects of Fed Policy on Interest Rates
  • Ricardian Equivalence