1A. evaluate the impact of global financial markets on U.S. financial market performance over the past three years and suggest which foreign market has had the most significant impact. Provide support for your conclusion.
B. Imagine one large global financial market. Describe how it would function and the affect it would have on the global economy.
2A. from the first e-Activity, speculate the affect a long-term low interest will have on retailers, small businesses, or manufacturers (choose one).
B. From the second e-Activity, determine how the very large U.S. national debt could affect interest rates over the next five years and the impact on market stability within the U.S.
Go to the MSNBC Website to read the news transcript titled “Fed says it will hold rates fast until mid-2013,” dated August 9, 2011, located at http://www.msnbc.msn.com/id/44064023/ns/business-stocks_and_economy/t/fed-says-it-will-hold-rates-fast-until-mid-/#.T1jUNHkmx8E. Be prepared to discuss.
Go to the USDebtClock.org Website to review the current U.S. national debt, located at http://USdebtclock.org. Be prepared to discuss.
3A. When the economic crises in the countries are due to a weak economy, local interest rate tends to be very low. However, if the crisis was caused by an unusual high rate of inflation, interest rates tend to be very high. Explain why?
3B. Global financial market regulations. Assume that countries A and B are of similar size, that they have both similar economies, and that the government debt level of both countries is within reasonable limits. Assume that the regulation in the country A require complete disclosure of financial reporting by issuers of debt in that country but that regulations in the country B do not require much disclosure of financial reporting. Explain why the government of country A is able to issue debt at a lower cost that the government of country B.
4A.EFFECTS ON MONEY SUPPLY: why does the fed’s open market operations have a different effect on the money supply than do transaction between two depository institutions?
4B.THE FED’S IMPACT ON HOME PURCHASES: explain how the fed’s influences the monthly mortgage payment on homes. how might the fed indirectly influence the total demand for home by consumers?
4C. THE FED’S IMPACT ON SECURITY PRICES: explain how the fed’s monetary policy may indirect affect the prices of equity securities?
4D. CONSUMER FINANCIAL PROTECTION BUREAU: as a result of the financial reform act of 2010, the consumer financial bureau was established and housed within the federal reserve. explain the role of this bureau.
5A. TAX EFFECTS ON YIELDS: do investor in high tax bracket or those in low tax brackets benefit more from tax-exempt securities? why? at a given point in time, which offer a higher before tax yield: municipal bonds or corporate bonds? why? which has the higher after-tax yield? if the taxes did not exist, wound treasury bonds offer a higher or lower yield than municipal bonds with the same maturity? why?
5B.IMPACT OF LIQUIDITY PREMIUM ON FORWARD RATE: explain how consideration of a liquidity premium affects the estimate of a forward interest rate?
• . From the first e-Activity, create an argument on whether the yield rate or the forward interest rate has the greater impact on interest rates in the U.S.
• Analyze the current economic forecasts by economists and financial experts, and predict the impact on the interest rate term structure.
• From the second e-Activity, imagine the Federal Reserve Bank did not exist. Speculate how the economy would function without its services.
• From the third e-Activity, summarize your article’s position (critic or ally), being sure to cite your source, and opine on your agreement or disagreement with the argument presented. Support your response with evidence or an example.
NOTE ( USE THIS E-ACTIVITIES TO ANSWER QUESTION 6A AND 6B ONLY}
• Go to the Federal Reserve Bank of San Francisco’s Website to read the article titled “What Moves the Interest Rate Term Structure?” dated November 7, 2011, located athttp://www.frbsf.org/publications/economics/letter/2011/el2011-34.html. Be prepared to discuss.
• Watch the YouTube video titled “What does the Federal Reserve Bank do?” (1 min 45 s) dated July 23, 2009, located at http://www.youtube.com/watch?v=zInPquYgp2w. Be prepared to discuss.
• Research the Internet or the Strayer Library to find an article that criticizes or praises the Federal Reserve Bank’s actions during the Great Recession (2008-2011). Be prepared to discuss.
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