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Financial Institutions, Markets, and Money, 11th Edition

Financial Institutions, Markets, and Money, 11th Edition (EHEP002073) cover image
Kidwell's Financial Institutions 11th Edition presents a balanced introduction to the operation, mechanics, and structure of the U.S. financial system, emphasizing its institutions, markets, and financial instruments. The text discusses complex topics in a clear and concise fashion with an emphasis on real-world data, global events, and personal finance examples to help retain topical interest. The authors stress fundamental concepts with an emphasis on understanding how things work in the real world. The text captures the vibrancy and excitement created by the dramatic changes taking place in the U.S. financial system.

In the eleventh edition, special attention is given to the Federal Reserve System and its conduct of monetary policy. The authors also stress the risks that the financial institutions face (i.e. interest rate risk, credit risk, liquidity risk, foreign exchange risk) and how they can manage those risks in financial markets. Furthermore, the authors recognize the impact that technology and globalization have on the operations and structure of the financial system. The book is also written with a strong historical perspective with attention given to the historical development of financial institutions and markets with discussion of important historical events.

 

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Financial Institutions, Markets and Money (11th Edition)
Contents

Part I , THE FINANCIAL SYSTEM
Chapter 1 An Overview of Financial Markets and Institutions
Chapter Preview
Learning Objectives
1.1 The Financial System
1.2 Financial Markets and Direct Financing
Do You Understand?
PEOPLE & EVENTS: Wall Street Faces Global Competition
1.3 Types of Financial Markets
1.4 The Money Markets
1.5 The Capital Markets
Do You Understand?
1.6 Financial Intermediaries and Indirect Financing
Do You Understand?
1.7 Types of Financial Intermediaries
Do You Understand?
1.8 The Risks Financial Institutions Manage
1.9 Regulation of the Financial System
Do You Understand?
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

Chapter 2 The Federal Reserve and Its Powers
Chapter Preview
Learning Objectives
2.1 Origins of The Federal Reserve System
PEOPLE & EVENTS: Free Banking and Wildcat Banks
2.2 The Current Structure of The Fed
2.3 Monetary Powers of the Board of Governors
2.4 The Fed's Regulatory Powers
2.5 Independence of The Fed
Do You Understand?
2.6 The Fed's Balance Sheet
Learning by Doing 2.1: Computing a Bank's Excess Reserve Position
2.7 The Fed's Role In Check Clearing
2.8 Federal Reserve Tools of Monetary Policy
PEOPLE & EVENTS: A Contrast In Style: Greenspan versus Bernanke
Learning by Doing 2.2: Calculating a Bank's Reserve Position
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

 

Chapter 3 The Fed and Interest Rates
Chapter Preview
Learning Objectives
3.1 Federal Reserve Control of The Money Supply
3.2 The Fed's Influence on Interest Rates
3.3 The Treasury Department and Fiscal Policy
Do You Understand?
3.4 Goals of Monetary Policy
PEOPLE & EVENTS: The Fed as Lender of Last Resort: Preventing a Financial Panic
3.5 The Fed and the Economy
PEOPLE & EVENTS: Black Monday
3.6 Complications of Monetary Policy
3.7 Anatomy of a Financial Crisis
Do You Understand?
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

Part II, How Interest Rates Are Determined
Chapter 4 The Level of Interest Rates
Chapter Preview
Learning Objectives
4.1 What Are Interest Rates?
4.2 The Real Rate of Interest
4.3 Loanable Funds Theory of Interest
Do You Understand?
4.4 Price Expectations and Interest Rates
PEOPLE & EVENTS: Irving Fisher (1867-1947): Economist
Do You Understand?
PEOPLE & EVENTS: Estimating the Expected Rate of Inflation from TIPS
4.5 Forecasting Interest Rates
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

 


Chapter 5 Bond Prices and Interest Rate Risk
Chapter Preview
Learning Objectives
5.1 The Time Value of Money
Do You Understand?
5.2 Bond Pricing
PEOPLE & EVENTS: Rogue Trader Incurs Huge Financial Losses for French Bank
Learning by Doing 5.1: Calculating the Price of a Bond Using a Financial Calculator
5.3 Bond Yields
Learning by Doing 5.2: Calculating the Yield to Maturity on a Bond
Do You Understand?
5.4 Important Bond Pricing Relationships
5.5 Interest Rate Risk and Duration
Learning by Doing 5.3: Calculating the Duration of a Bond
PEOPLE & EVENTS: Betting the Farm on Interest Rates and Losing
Do You Understand?
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise


Chapter 6 The Structure of Interest Rates
Chapter Preview
Learning Objectives
6.1 The Term Structure of Interest Rates
Learning by Doing 6.1: Using the Term Structure Formula to Calculate Implied Forward Rates
Do You Understand?
6.2 Default Risk
PEOPLE & EVENTS: The Credit-Rating Club
6.3 Tax Treatment
Do You Understand?
6.4 Marketability
6.5 Options of Debt Securities
Do You Understand?
6.6 Behavior of Interest Rates over the Business Cycle
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise


Part III, Financial Markets

Chapter 7 Money Markets
Chapter Preview
Learning Objectives
7.1 How the Money Markets Work
7.2 Economic Role of the Money Markets
7.3 Characteristics of Money Market Instruments
7.4 Treasury Bills
Learning by Doing 7.1: Calculating the Discount Yield
Learning by Doing 7.2: Calculating the Bond Equivalent Yield
Do You Understand?
7.5 Federal Agency Securities
7.6 Fed Funds
7.7 Other Major Money Market Instruments
PEOPLE & EVENTS: Lehman Brothers "Creative" Accounting: Repos 105 and 108
7.8 Money Market Participants
7.9 The Impact of the 2007-2009 Financial Crisis on the Money Markets
PEOPLE & EVENTS: How Breaking the Buck (Almost) Broke the Commercial Paper Market
Do You Understand?
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise


Chapter 8 Bond Markets
Chapter Preview
Learning Objectives
8.1 Functions of the Capital Markets
8.2 U.S. Government and Agency Securities
PEOPLE & EVENTS: What Do Negative Yields on TIPS Tell Us?
Do You Understand?
8.3 State and Local Government Bonds
8.4 Corporate Bonds
Do You Understand?
8.5 Financial Guarantees
8.6 Securitized Credit Instruments
8.7 Financial Market Regulators
8.8 Bond Markets Around the World Are Increasingly Linked
8.9 The Impact of the 2007-2009 Financial Crisis on the Bond Markets
Do You Understand?
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise


Chapter 9 Mortgage Markets
Chapter Preview
Learning Objectives
9.1 The Unique Nature of Mortgage Markets
9.2 Types of Mortgages
Do You Understand?
9.3 Mortgage Qualifying
Do You Understand?
9.4 Mortgage-backed Securities
Learning by Doing 9.1: Determining How Much Home You Can Buy
9.5 Mortgage Prepayment Risk
Do You Understand?
9.6 Participants in the Mortgage Markets
PEOPLE & EVENTS: The Rise and Fall of Fannie and Freddie
9.7 Relationship between Mortgage Markets and the Capital Markets
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise


Chapter 10 Equity Markets
Chapter Preview
Learning Objectives
10.1 What Are Equity Securities?
10.2 Equity Markets
10.3 Equity Trading
10.4 Global Stock Markets
10.5 Regulation of Equity Markets
Do You Understand?
10.6 Equity Valuation Basics
Do You Understand?
Learning by Doing 10.1: Valuing a Stock
10.7 Equity Risk
Do You Understand?
10.8 Stock Market Indexes
PEOPLE & EVENTS: Circuit Breakers, Black Monday, and the Flash Crash
10.9 The Stock Market as a Predictor of Economic Activity
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise


Chapter 11 Derivatives Markets
Chapter Preview
Learning Objectives
11.1 The Nature of Derivative Securities
11.2 Forward Markets
11.3 Futures Markets
11.4 Uses of the Financial Futures Markets
Learning by Doing 11.1: Hedging Risk in a Stock Portfolio
11.5 Risks in the Futures Markets
Do You Understand?
11.6 Options Markets
Do You Understand?
11.7 Regulations of the Futures and Options Markets
11.8 Swap Markets
PEOPLE & EVENTS: Swap Market Regulation
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise


Chapter 12 International Markets
Chapter Preview
Learning Objectives
12.1 Difficulties of International Trade
12.2 Exchange Rates
12.3 Balance of Payments
12.4 Foreign Exchange Markets
12.5 Spot and Forward Transactions
Learning by Doing 12.1: Using Forward Contracts to Hedge Exchange Rate Risks
PEOPLE & EVENTS: The Big Mac Test of Purchasing Power Parity
12.6 Capital Flows and Exchange Rates
Do You Understand?
12.7 Government Intervention in Foreign Exchange Markets
Learning by Doing 12.2: Using Purchasing Power Parity to Determine the Expected Exchange Rate
12.8 Financing International Trade
Do You Understand?
12.9 International Money and Capital Markets
12.10 The Globalization of Financial Markets
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

Part IV, Commercial Banking

Chapter 13 Commercial Bank Operations
Chapter Preview
Learning Objectives
13.1 An Overview of the Banking Industry
13.2 Balance Sheet for a Commercial Bank
13.3 The Source of Bank Funds
Do You Understand?
13.4 Bank Uses of Funds: Bank Investments and Cash Assets
13.5 Bank Uses of Funds: Loans and Leases
13.6 Loan Pricing
13.7 Analysis of Loan Credit Risk
PEOPLE & EVENTS: What's Your Score?
Do You Understand?
13.8 Fee-Based Services
13.9 Off-Balance-Sheet Banking
Do You Understand?
13.10 Bank Earnings
13.11 Bank Performance
Do You Understand?
13.12 Bank and Financial Holding Companies
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

Chapter 14 International Banking
Chapter Preview
Learning Objectives
14.1 Development of International Banking
14.2 Regulation of Overseas Banking Activities
14.3 Delivery of Overseas Banking Services
PEOPLE & EVENTS: Credit Risk, Subprime Mortgage Crisis of 2007, and Challenges to the Banking Sector
Do You Understand?
14.4 International Lending
Do You Understand?
14.5 Foreign Banks in the United States
14.6 Future Directions of International Banking
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

 

Chapter 15 Regulation of Financial Institutions
Chapter Preview
Learning Objectives
15.1 Reasons for Regulation
15.2 Bank Failures and Regulation
PEOPLE & EVENTS: WaMu and the Destructive "Power of Yes"
15.3 Safety and Soundness Regulation: Deposit Insurance
Do You Understand?
15.4 Deposit Insurance Issues
Do You Understand?
15.5 Safety and Soundness Regulation: Capital Requirements
Do You Understand?
15.6 Bank Examinations
15.7 Structure and Competition Regulations
15.8 Consumer Protection Regulations
PEOPLE & EVENTS: Dual or Dueling Banking Systems?
15.9 Bank Regulators
Do You Understand?
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

Part V, Financial Institutions

Chapter 16 Thrift Institutions and Finance Companies
Chapter Preview
Learning Objectives
16.1 Historical Development of Savings Institutions
16.2 Operations of Savings Institutions
Do You Understand?
16.3 Credit Unions
PEOPLE & EVENTS: Demographic Change Brings Opportunity
PEOPLE & EVENTS: Commercial Banks Versus Credit Unions
16.4 Thrift Institutions Around the Globe
Do You Understand?
16.5 Finance Companies
Do You Understand?
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

 

Chapter 17 Insurance Companies and Pension Funds
Chapter Preview
Learning Objectives
17.1 Insurance
PEOPLE & EVENTS: 9/11 and Katrina: Insurance Coverage Disputes
17.2 The Insurance Industry
Do You Understand?
17.3 Life and Health Insurance
Do You Understand?
17.4 Property and Liability Insurance
Learning by Doing 17.1: Calculating Policyholders' Surplus
Do You Understand?
17.5 Pensions
Learning by Doing 17.2: Measuring Insurance Company Profitability with the Combined Ratio
Do You Understand?
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

Chapter 18 Investment Banking
Chapter Preview
Learning Objectives
18.1 The Relationship between Commercial and Investment Banking
18.2 Primary Services of an Investment Bank
PEOPLE & EVENTS: Where, Oh, Where Have All the Investment Banks Gone?
Do You Understand?
18.3 Private Equity
Learning by Doing 18.1: Evaluating a Venture Capital Investment
Do You Understand?
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

Chapter 19 Investment Companies
Chapter Preview
Learning Objectives
19.1 Investment Companies
19.2 Open-end Mutual Funds
Learning by Doing 19.1: Calculating Net Asset Value
PEOPLE & EVENTS: Money Market Mutual Funds Breaking the Buck
19.3 Closed-end Mutual Funds
19.4 Exchange-traded Funds
Do You Understand?
19.5 Hedge Funds
PEOPLE & EVENTS: Hedge Funds and the Dodd-Frank Wall Street Reform and Consumer Protection Act
Do You Understand?
19.6 Real Estate Investment Trusts
Do You Understand?
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

Chapter 20 Risk Management in Financial Institutions
Chapter Preview
Learning Objectives
20.1 The Dilemma: Profitability versus Safety
20.2 Liquidity Management
Do You Understand?
PEOPLE & EVENTS: Operational Risk
20.3 Managing Credit Risk
Do You Understand?
PEOPLE & EVENTS: Counterparty Controversy: AIG and Its Risky Risk Management
20.4 Measuring and Assessing Interest Rate Risk
20.5 Hedging Interest Rate Risk
Do You Understand?
Learning by Doing 20.1: Measuring Interest Rate Risk
Summary of Learning Objectives
Key Terms
Questions and Problems
Internet Exercise

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"Real World" Data: emphasis on how to read and interpret financial data. The book's web presence was also enhanced to include updates and annotated references
Rewritten Chapter: Notation used in the formulas within Chapter 5: "Bond Pricing and Interest Rate Risk" have been simplified and the treatment of yield and return measures have been revised
Personal Finance Examples are used where appropriate to make the material more interesting, easier to understand, and relevant
Updated and Revised Exhibits: All of the book's exhibits have been updated and revised; tables, charts, and graphs have been simplified to better explain what it is they should be taking away
Thoroughly revised and Updated "People & Events" Boxes: Now include more up-to-date industry applications of the concepts described in the chapters
Substantially Revised Chapter 12 "International Markets" to reflect the many changes associated with the continuing consolidation of the European economy.

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Comprehensive coverage of financial institutions and markets, including the latest topics and trends in the industry, including electronic banking, and global market interactions
Chapter Previews and Learning Objectives to motivate student interest and alert the student to the key elements
"Do You Understand?" questions test students' understanding of key material
Chapter Take-Aways present a bulleted list of the most important concepts the students should take away from the chapter
People & Event boxes relate to hot topics in the field and chapter learning objectives.
Internet Exercise directs students to websites from which they can obtain additional information or analyze data that illustrates key points

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Instructors Resources
Wiley Instructor Companion Site
Wiley Finance Weekly Updates www.wileyfinanceupdates.com
Computerized Test Bank
Instructor's Manual
Solutions
Test Bank
PowerPoint Slides
Additional Resources
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Students Resources
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Study Guide
Student Web Quizzes
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Do You Understand Solutions
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Purchase Options
Wiley E-Text   
Financial Institutions, Markets, and Money, 11th Edition
ISBN : 978-1-118-21469-5
736 pages
December 2011, ©2012
$71.50   BUY

Hardcover   
Financial Institutions, Markets, and Money, 11th Edition
ISBN : 978-0-470-56108-9
736 pages
November 2011, ©2012
$199.95   BUY

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