5-1 CHAPTER 5 The Financial environment. Markets, Institutions and Interest Rates ■ Financial markets Types of financial institutions Determinants of interest rates ■ Yield curves Copy right C 2002 by Harcourt, Inc. All rights reserved
5 - 1 Copyright © 2002 by Harcourt, Inc. All rights reserved. CHAPTER 5 The Financial Environment: Markets, Institutions, and Interest Rates ◼Financial markets ◼Types of financial institutions ◼Determinants of interest rates ◼Yield curves
5-2 Define these markets ■ Markets in genera Markets for physical assets Markets for financial assets Money versus capital markets Primary versus secondary markets Spot versus future markets Copy right C 2002 by Harcourt, Inc. All rights reserved
5 - 2 Copyright © 2002 by Harcourt, Inc. All rights reserved. Define these markets ◼Markets in general ◼Markets for physical assets ◼Markets for financial assets ◼Money versus capital markets ◼Primary versus secondary markets ◼Spot versus future markets
5-3 Three Primary Ways Capital Is Transferred Between Savers and Borrowers ■ Direct transfer Through an investment banking house Through a financial intermediary Copy right C 2002 by Harcourt, Inc. All rights reserved
5 - 3 Copyright © 2002 by Harcourt, Inc. All rights reserved. ◼Direct transfer ◼Through an investment banking house ◼Through a financial intermediary Three Primary Ways Capital Is Transferred Between Savers and Borrowers
5-4 The Top 5 Banking Companies 园 in the world,1999 Bank Name Country Total assets Deutsche Bank AG Germany $735 billion UBS Group Switzerland $687 billion Citigroup United States $669 billion Bank of America United States $618 billion Bank of Tokyo Japan s580 billion Copy right C 2002 by Harcourt, Inc. All rights reserved
5 - 4 Copyright © 2002 by Harcourt, Inc. All rights reserved. The Top 5 Banking Companies in the World, 1999 Bank Name Country Total assets Deutsche Bank AG Germany $735 billion UBS Group Switzerland $687 billion Citigroup United States $669 billion Bank of America United States $618 billion Bank of Tokyo Japan $580 billion
5-5 Organized Exchanges versus Over-the-Counter Market Auction markets versus dealer markets(exchanges versus the OTC market) NYSE versus Nasdaq system Differences are narrowing ■ Nasdaq vs. true otc Copy right C 2002 by Harcourt, Inc. All rights reserved
5 - 5 Copyright © 2002 by Harcourt, Inc. All rights reserved. Organized Exchanges versus Over-the-Counter Market ◼Auction markets versus dealer markets (exchanges versus the OTC market) ◼NYSE versus Nasdaq system ◼Differences are narrowing ◼Nasdaq vs. true OTC