Fin 360 - Capital Markets

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National Banking Act

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1864;

Created national currency;

Comptroller-of-the-currency: take care of currency and issue charter to banks;

Created dual banking system in USA - bank can get charter from the comptroller (aka national bank), or from a given state.

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Question: Bank of America has a national charter which was issued by?

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Comptroller of the currency, which was issued under the national banking act of 1864.

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FRS; the Fed

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Federal Reserve System, 1913;

All NATIONAL BANKS required to become members of the FED.

Responsible for the MONETARY POLICY of USA.

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Glass-Steagall Act

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1933;

Separated investment banks from commercial banks

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FDIC

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Ensures accounts in commercial banks.

NATIONAL or STATE charter

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FHLBB

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Federal Home Loan Bank Board; FHLB
FSLIC (commercial banks)

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Macfadden Banking Act

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1927;

created an environment in which smaller banks can exist.

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Fannie Mae

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Federal National Mortgage Association, 1938;

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FHA

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Federal Housing Administration;

created under Fannie Mae

insured loans for people who are not qualified or don't have enough down payment

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Ginnie Mae

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1968;

pass through securities were created by ginnie mae

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DIDMCA

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Depository Institutions Deregulation and Monetary Control Act, 1980;

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FIRREA

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1989;

abolished FHLBB and FSLIC

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U.S. Dollar is backed by the _____ ______ and _____ __________.

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Legal System

Social Convention

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Inflation

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Too much money chasing for few goods and services

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Velocity of Money

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How often a dollar changes hands. Determined by public.

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Sources of Bank funds

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deposits;

borrowings from other banks, from the fed, and federal funds;

sale of their own securities such as stock and bonds

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sources of bank income

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interest earned on loans made by the bank;

interest earned from investment in government securities;

service charges and fees

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NCUA

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National Credit Union Administration - parent agency of Credit Union

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Money Market

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Markets (4)

financial markets where short-term (1 yr or less) securities are traded.

sale of OWN securities.

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Capital Markets

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Money Market (4)

Long term securities with maturity of more than 1 yr. ex: NYSE: stock off walmart, boa, etc.

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Primary Market

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Markets (4)

WHOLESALE market;

open to investment brokers/bankers only;

new securities of the company are traded

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Secondary Market

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Markets (4)

RETAIL market;

securities sold previously are traded;

companies don't make money. if ceo and mgmt want to keep their job, they have to have people who buy enough of their shares.

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Market

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building where securities are being traded;

NYSE is a SECONDARY stock market

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Banks are ________ and _______

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borrowers; lenders

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GNP =

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money supply * velocity

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If money supply equals 400 and velocity of money is 5, then GNP is equal to .....

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2000;

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5% increase in money supply brings in ___ increase in GNP. therefore, velocity must be ______

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5%; constant

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voluntary pension plans created by congress

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IRA;

401K, 403B, 457

KEOGH

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Backbite

Back 29

Legal System and Social Convention

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Hyperinflation

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when inflation is high