...Kelcie Jeffries Money & Banking Mr. Foster March 8, 2014 How Technology has changed the Banking World over Time The ATM “In 1939, Luther Simjian patented an early and not-so-successful prototype of an ATM. However, some experts have the opinion that James Goodfellow of Scotland holds the earliest patent date of 1966 for a modern ATM, and John D White in the US is often credited with inventing the first free-standing ATM design. In 1967, John Shepherd-Barron invented and installed an ATM in a Barclays Bank in London. Don Wetzel invented an American made ATM in 1968. However, it wasn't until the mid to late 1980s that ATMs became part of mainstream banking” (Bellis). Although we can see that it is not clear on who invented the ATM, I think they all played an important role in developing what we have in today’s world. Don Wetzel was the most recent with installing one of the first ATMs in American and him and two other men invented what we know as today as the ATM card. The ATM made its first showcase on the outside at the Rockville Center, New York Chemical Bank. Also, another interesting fact I learned about this first ATM was that it only gave you cash it did not tell you your balance or let you transfer funds like we can at today’s ATM. “The ATM we know today was later installed and invented in 1971 and was called the total teller” (Bellis). During this era not every customer could have the right to an ATM card, banks would only let credit card holders have access...
Words: 2669 - Pages: 11
...TB_599810_Mishkin_TP.qxd:Layout 1 6/4/09 9:45 AM Page 1 Test Bank to accompany Richard G. Stahl University of Texas, Arlington Louisiana State University Pearson Addison-Wesley Boston San Francisco New York London Toronto Sydney Tokyo Singapore Madrid Mexico City Munich Paris Cape Town Hong Kong Montreal p an rot d ect is e fo d b T r i y hi ns U s w tr S c o uc o rk to py is rs rig ’u h se t l on aw ly s . Kathy Kelly TB_599810_Mishkin_TP.qxd:Layout 1 6/4/09 9:45 AM Page 2 This work is protected by United States copyright laws and is provided solely for the use of instructors in teaching their courses and assessing student learning. Dissemination or sale of any part of this work (including on the World Wide Web) will destroy the integrity of the work and is not permitted. The work and materials from it should never be made available to students except by instructors using the accompanying text in their classes. All recipients of this work are expected to abide by these restrictions and to honor the intended pedagogical purposes and the needs of other instructors who rely on these materials. Acquisitions Editor: Noel Kamm Seibert Project Manager: Kerri McQueen Production Editor: Alison Eusden Manufacturing Buyer: Carol Melville Copyright© 2010, 2007, 2004, 2001 Pearson Education, Inc., 75 Arlington Street, Boston, MA 02116. Pearson Addison-Wesley. All rights reserved. Printed in the United States...
Words: 15556 - Pages: 63
...Chapter 15 Homework Solutions 2. During Christmastime, when the public’s holdings of currency increase, what defensive open market operations typically occur? An increase in currency holdings causes the currency ratio to rise and the money multiplier to fall. As a result, there will be a decrease in the money supply. To maintain the money supply, the Fed must make a defensive purchase of bonds on the open market, raising the monetary base to counter the decline in the multiplier. 6. “The only way the Fed can affect the level of borrowed reserves is by adjusting the discount rate.” Is this statement true, false, or uncertain? Explain your answer. This statement is false. The Fed could affect the level of borrowed reserves in two ways. First, they could directly limit the amount of discount loans an individual bank can take out. Second, they could reduce non-borrowed reserves to such a point that even with a fixed discount rate, borrowed reserves will rise, as outlined in the diagram below: In the diagram above, the Fed cuts non-borrowed reserves by making open-market sales of bonds. This causes the federal funds rate to rise above the discount rate, prompting banks to borrow from the Fed. As a result, the total reserves held by banks (R2) will be equal to NBR2 supplied by the Fed and reserved borrowed directly from the Fed (BR). 7. Using the supply and demand analysis of the market for reserves, show what happens to the federal...
Words: 1136 - Pages: 5
...Money and Banking Prolonged Recession The reasoning behind why this country is experiencing a prolonged recessionary period is difficult to see because much of it is unseen. The problems with our deficit, unemployment, and growth are difficult concepts to see as an individual person, due to everyone seeing/being affected by a different aspect of it. It is hard to see the real problem and these anything we could want to test is even harder to attempt because it affects millions of Americans. If we were to look at Keynes theory as a way to solve our financial crisis we need to examine the stimulus effect on unemployment and growth. Keynes argued that demand determines overall economic activity and that low demand could cause prolonged periods of unemployment. Keynesians believe that the government should use fiscal and monetary tools to stimulate the effects of the recession. Hayek’s theory on the other hand is inferred to say that the federal government should make money as neutral as possible, like the rule of law, one that never favors one party or the other. Supporters of Hayek believe that more spending will not lead to economic recovery during a recession/depression. The facts: In 2009, the American Reinvestment and Recovery Act allowed for $787 billion (composed of three parts: Tax breaks for individuals and companies, Aid to states to fund unemployment benefits, Medicaid, and schools, and funding for infrastructure projects) and it was predicated that unemployment...
Words: 465 - Pages: 2
...Taylor ECO320 Money & Banking March 2, 2014 Prof. Diana Bonina, Ph.D. Strayer University The Federal Reserve established on December 23, 1913 when President Woodrow Wilson signed the Federal Reserve Act into law. Although started in 1913, actual operations of the Reserve began in 1914. In order to provide the country with a safer financial system, Congress created The Federal Reserve System as the central bank of the United States. Today, the Federal Reserve’s responsibility falls into four general areas: conducting the nation’s monetary policy; supervising, regulating and other soundness of the country’s financial system; maintaining the stability of the financial system and providing certain financial services to the U.S. government, U.S. financial institutions, and foreign official institutions. The Federal Reserve can use the following tools to influence the money supply: Open Market Operations, The Required-Reserve Ratio and Discount Rate. The Federal Reserve uses Open Market Operations as its primary tool to influence the supply of bank reserves. This tool consists of Federal Reserve purchases and sales of financial instruments, usually securities issued by the U.S. Treasury, Federal agencies and government-sponsored enterprises. Using Open Market Operations, Federal Reserve can affect the money supply by buying or selling the U.S. government securities. When the Federal Reserve purchases a government security from the public, it does so with money that did not...
Words: 2264 - Pages: 10
...of Money, Banking & Financial Markets | 2014 | Ch 3 Sheet 3 | Instructor: Hala A. Fares | Tutor: Sarah Mostafa | MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) To an economist, ________ is anything that is generally accepted in payment for goods and services or in the repayment of debt. 1) _______ A) credit B) money C) wealth D) income 2) Money is 2) _______ A) a flow of earnings per unit of time. B) anything that is generally accepted in payment for goods and services or in the repayment of debt. C) always based on a precious metal like gold or silver. D) the total collection of pieces of property that are a store of value. 3) Currency includes 3) _______ A) paper money, coins, checks, and savings deposits. B) paper money and coins. C) paper money and checks. D) paper money, coins, and checks. 4) The total collection of pieces of property that serve to store value is a person's 4) _______ A) wealth. B) money. C) credit. D) income. 5) A person's house is part of her 5) _______ A) money. B) income. C) wealth. D) liabilities. 6) ________ is used to make purchases while ________ is the total collection of pieces of property that serve to store value. 6) _______ A) Money; wealth B) Income; money C) Money; income D) Wealth; income 7) ________ is a flow of earnings per unit of time. 7) _______ A) Money B) Income C) Wealth D) Currency 8) An individual's annual salary is her 8) _______ A) income. B) money. C)...
Words: 3207 - Pages: 13
...Team members must hold at least three meetings to discuss the joint project, and you are required to record collective activities and individual activities as detailed as possible in your logbook. For individual activities, they must be endorsed by the other member. No free-riding for the group project is allowed. I reserve the right to read your logbook to identify each member’s contribution to the group work. After reading this article “How does the stock market affect the economy?” it is obvious that the main topic of this article is about the stock market and how it affects companies and households. There are two main ideas of the article which I will summarize in this paragraph. Stock price declines, especially those induced by profit warnings, increase shareholder pressure on managers to cut costs by laying off workers and scaling back investment. Second, a large stock price decline reduces the value of unexercised stock options, which falls as the gap narrows between a company’s stock price and the price at which workers can buy stock under an option. Third, the factors dragging down stock prices, such as a weaker or more uncertain profit outlook, may spur investors to demand higher risk premiums, which boosts the cost of financing business investment. A fourth way lower stock prices affect firms is that they will have less incentives to invest in new capital if there is a fall in the ratio (q) of the cost of buying existing capital to that of buying new capital. Lower...
Words: 1020 - Pages: 5
...with solid growth and falling inflation, so there is no pressure on the Bank of England to take policy action at the moment.”(Anderson) However, Mark J. Carney, the governor of the Bank of England, emphasized higher interest rates were still some way off and that any increase would be gradual. As Britain’s economic recovery continues and inflation appears to be stable, the bank will continue to hold 375 billion pounds, or $627 billion, in government bonds purchased over the past five years. (Anderson) Anderson, the writer of this article goes on to say that “some economists believe that purchases of government bonds could end up pushing inflation higher because the Bank of England printed large quantities of money. There is concern about the impact that withdrawing the money will have.” The central bank has indicated that it will not sell its stock of government bonds until it increases interest rates, which analysts do not expect to occur until 2015. In Frankfort, Mario Draghi, the president of the European Central Bank described the euro zone as an “island of stability”. He also stated that Germany and most other euro zone countries were not in danger of falling into a deflationary rut. (Ewing). Mr. Draghi continued on to ensure the people, after the central bank had left its interest rate at 0.25 percent, that even after improvements in the economy the interest...
Words: 457 - Pages: 2
...1. Under what circumstances, if any, is signing a merger or acquisition agreement with a go-shop clause an effective substitute for a pre-signing market check by the seller? 2. Under Revlon duties, directors are expected to take steps to obtain the best transaction reasonably available for the stakeholders. The Delaware Supreme Court has stated, “there is no single blueprint that a board must follow to fulfill its [Revlon] duties” (citation). After the Smurfit-Stone case, it became clear that board did not need to do a pre-signing market check to fulfill their fiduciary duties. Therefore, “go-shop” provisions have been used more often in place of pre-market checks. Go-shop clauses are a provision that allows the target company to solicit competing proposals for a certain amount of time after they have signed an agreement with the potential buyer. The advantages of the “go-shop” are that it decreases the amount of time until closing as the agreement is already in place, sets a “floor value” which the seller can canvass the market, and provides a “break-up” fee to the potential buyer if they are outbid. The seller usually has a bifurcated fee structure with a lower termination fee payable through the go-shop clause. If there is a reduced termination fee, it may generate more interest than a “no-shop” provision, and potentially more offers. From the seller’s perspective, a go-shop clause may be favored if there are risks during an auction such as lower than expected price...
Words: 1515 - Pages: 7
...Bonds A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing. The Federal government, states, cities, corporations, and many other types of institutions sell bonds. Generally, a bond is a promise to repay the principal along with interest on a specified date (maturity). Some bonds do not pay interest, but all bonds require a repayment of principal. When an investor buys a bond, becomes a creditor of the issuer. However, the buyer does not gain any kind of ownership rights to the issuer. On the hand, a bond holder has a greater claim on an issuer's income than a shareholder in the case of financial distress. Bonds are often divided into different categories based on tax status, credit quality, issuer type, maturity and secured/unsecured . U.S. Treasury bonds are generally considered the safest unsecured bonds, since the possibility of the Treasury defaulting on payments is almost zero. The yield from a bond is made up of three components: coupon interest, capital gains and interest on interest (if a bond pays no coupon interest, the only yield will be capital gains). A bond might be sold at above or below par (the amount paid out at maturity), but the market price will approach par value as the bond approaches maturity. A riskier bond has to provide a higher payout to compensate for that additional risk. Some bonds are tax-exempt, and these are typically issued by municipal, county or state governments, whose interest...
Words: 631 - Pages: 3
...prices of securities? List some of the factors that may cause shift in the demand and supply of securities. (Ch 2 pages 21-23) The financial market determines prices of securities by supply and demand. Factors that may cause shift in the demand and supply of securities * The supply curve of securities shifts right when the business believes their demand for their product will increase, which leads to borrowing more than before by increasing their supply securities * Investors who wants to buy more securities – demand will increase Q3. Make a distinction between inside money and outside money. (See Ch 3, pages 4 1-44) Outside money is money created by the government or by nature, not by groups of institutions in the private sector. Inside money is money that is created in the private sector. For example, inside money includes checking account held at the bank and outside money could be gold and cash. Q4 Select the incorrect statement(s) from the following (This question carries 1 mark) (a)The simple equation that can be used to predict how the Federal Reserve will change interest rates is known as the Taylor rule (b)...
Words: 1464 - Pages: 6
...earn profits. First of all, market lacked the sufficient capacity to absorb such a great size of investment. Secondly, the high leverage made LTCM vulnerable to market fluctuations. After Russia default on its government-issued bonds, panicked investors flight to quality assets like the US Treasuries while selling the risky securities in which LTCM trade, and further prevented the price convergence which LTCM bet on. At this time when LTCM heavily relied on leverage, Bear Stearns stopped to act as a clearinghouse for the fund’s trades, further worsened the situation of LTCM. When other major investment banks were invited by Fed to finance LTCM, Bear Stearns was the only bank which refused to join. Moreover, right after the banks injected money into LTCM, Bear ended LTCM’s last hope by calling a $500 billion short-term debt to decrease its own risk. While trying to maintain order, Fed worried that if it set the precedent of a government bailout of a private fund, then other funds would have...
Words: 888 - Pages: 4
...Free Money for Strangers South University Government assistance programs are supported by tax dollars. This is controversial for hardworking Americans. It seems as though those less fortunate get a pass and receive an income without working for it, while those working, continue to struggle to make what little they do have, stretch. That’s not total freedom in the land of opportunity. So the question that remains is what responsibility is it of ours to help those in need? Many people see this as the role of a just society: to provide its members with their basic needs. Yet many others find taxing productive workers to subsidize the less productive tantamount to theft. They argue that people are free to provide for themselves and should be held responsible for their actions if they do not. (Westfall). Why have people taken on such a negative view about paying taxes to support government programs? Perhaps because of statements like this: “What government programs gave was transient and superficial. What they destroyed was more fundamental.” (Sowell, 2000). Well I beg to differ; government assistance programs are not superficial. They are needed because they help provide assistance for programs such as: Disaster Assistance for Victims, Unemployment Insurance for the many out of jobs, and Supplemental Nutrition Assistance. With natural disasters that plague us today everyone turns to the government for help in their unfortunate time of need. What if the government offered...
Words: 1130 - Pages: 5
...inclusion would improve it could reduce the cost of cash to Indian economy to one-third to the current level of 5%-7% of GDP. They could also make payments of economic goods such as oil, fertilizers ect and accessible to everyone even in rural areas. RBI has established regional rural banks and electronic payments facilities for everyone, to make it more easy and to reduce chances of miss-use government has issued a biometric identification number to every citizen. RDI has adopted a technology-based agent bank model through BC and BF to improve outrich. BF could make it easy to identification of borrower and recovery. RBI has prohibited cash out of mobile wallets. Regulation on Financial Inclusion Nov-05 Banks mandated to offer basic banking 'no-frills' account with 'nil' or very low minimum balance. Jan-06 Banks permitted to use not-for-profit BCs and BFs. Customer charging not permitted. Nov-09 Banks allowed to collect reasonable service charges from customers and pay BCs. Nov-09 Banks asked for a roadmap by March 2010 for making a plan outlining by when they would complete financial inclusion in their designated areas. Jan-10 Banks advised to develop a three-year Financial Inclusion Plan by March 2010. Apr-10 BC guidelines relaxed to allow ‘for profit’ companies to act a Jul-11 Banks to allocate at least 25% of new branches during a year to unbanked rural centers. Mar-12 A retail outlet would have the branding of the bank that had...
Words: 488 - Pages: 2
...1. Name the primary objectives of all central banks * Low and stable inflation-when inflation is high it is confusing and it makes it hard to plan. * High and steady growth- stable predictable growth is higher than unstable, unpredictable growth. * Stable financial system- for the economy to operate efficiently the financial markets and institutions need to be stable. * Stable interest rates- interest rate vitality creates risk for both borrowers and lenders * Stable exchange rates- variable exchange rates make the revenues from foreign sales and the cost of purchasing imported goods hard to predict 2. Why is price stability (maintaining low inflation) an important objective of all central banks? $1 should always be worth $1. Prices are central to a market economy and we need to allocate our resources to best use. Inflation is bad for growth because it is unpredictable. Zero inflation is bad because we risk deflation. When inflation is high, growth is low. That’s why stable, low inflation is key. 3. What are the risks and rewards of writing and holding options and discuss the maximum gain, maximum loss and breakeven point. Option writer for a call- receive a premium and are obligated to sell at strike price Option writer for a put- receive a premium and are obligated to buy at strike price Option holder for a call- pay a premium and have the right to buy at the strike price Option holder for a put- pay a premium and have the right to sell...
Words: 1378 - Pages: 6
