Total return funds, 497
Trade balance, 379
Trade barriers, 351, 352t, 358, 360t
Trading activities, by banks, 415, 416
Trading Activities Manual, 434
Tranches, 338
Transaction costs
defined, 22, 160
financial intermediaries and, 22, 24,
25, 138–39
financial structure and, 138–39
Transition countries, 152–53
TRAPS (Trading Room Automated
Processing System), 225–26
Travelers Group, 480
Treasury bills (Japan), 47
Treasury inflation-protected securities
(TIPS), 282
Treasury Investment Growth Fund
(TIGRs), 284
Trichet, Jean-Claude, 205
Truth in Lending Act, 436, 438
Turkey, 181
12b-1 fees, 502
“Twin crises,” 183
Tyco International, 146
U
UBS Warburg, 159
Uncertainty, financial crises and,
165f, 167
Underdeveloped financial systems,
152–53
Underfunded pension plans, 532
Undersubscribed issues, 549
Undervaluation, of currency, 383
Underwriters, 517, 547t
Underwriting
conflicts of interest and, 155–56
defined, 18, 564
stocks and bonds, by investment
banks, 545–50
Unemployment, 233–34
Unexploited profit opportunities, 119–20
Uninsured mortgages, 336
United Kingdom
Bank of England, 206–7
inflation targeting in, 237, 238, 240
purchasing power parity theory and,
349–50
United States
balance
of payments deficit, 380
capital markets, 21
major regulatory legislation, 441–42t
Universal banking, 481
Universal life insurance policies, 521
Unsecured corporate bonds, 291
Unsecured debt, 137
Unsterilized foreign exchange
interventions, 376, 377, 377n
U.S. Congress
Federal Reserve and, 202–3, 209–11
U.S. Department of Agriculture, 597
U.S. dollar. See also foreign exchange
rates
Argentine peso and, 384
Chinese yuan pegged to, 389–90
dollarization, 385
euro and, 383
exchange process, 348
exchange rates, 5, 344, 365–66
foreign exchange market stability
and, 235
interest
rates and, 362–63
Japanese yen and, 348–49
subprime mortgage loans and, 364–65
U.K. exchange rate, 350
Used-car market, 140, 143–44
U.S. Flow of Funds report, 35
U.S. government and agency securities
as bank assets, 402
bank management of, 407
U.S. Supreme Court, 537
U.S. Treasury
Exchange Stabilization Fund, 376
Federal Reserve and, 210
foreign exchange policy, 376
monetary liabilities of, 215
money markets and, 258, 259t
savings and loan and banking crisis of
1980s and, 444
Separate Trading of Registered
Interest and Principal Securities
(STRIPS), 283–84, 467–69
Series I savings bonds, 51
Temporary Guarantee Program, 499
TIPS (Treasury Inflation Protection
Securities), 51
U.S. Treasury bills
auctions, 262t, 263, 264
book entry, 263
competitive bidding, 263
deep market for, 263
default risk, 263
Eurodollars and, 272
inflation rates, 265f
interest rates, 2, 64, 256f, 263–64,
265–66, 265f, 266f, 268f, 273f,
274, 283f
investment rate for, 261–62
liquidity of, 67–68, 263, 274
markets, 276t
money markets and, 258, 261–64
noncompetitive bidding, 263
real and nominal interest rates, 49n
riskiness of, 82, 83
U.S. Treasury bonds, 282–83, 504
default-free, 90, 91, 93
defined, 2n
Federal Reserve purchase of, 210n
financial futures market and, 598–99
forward rate calculations, 112
futures, 607–9, 611–13
income tax considerations, 94–96
inflation rate and, 283f
interest rates on, 94–96, 282, 283f
liquidity of, 93–94, 94–96
U.S. Treasury notes, 282–83
U.S. Treasury securities, 504
lending programs, 229
open market operations, 224
types of, 282–83
V
Value at risk (VAR), 415, 435
Value Line, 141
Value Line Survey, 125n
Vanguard Group, 54, 307, 501
Vanguard S&P 500 index fund, 494, 501
Variable-rate bonds, 291
Variable-rate mortgages, 573
Vault cash, 215, 401
Venture capital firms, 543, 558–62
asymmetric information and,
559–60
dot-com companies, 563
functions of, 558–59
history of, 560–61
investments, 559t
operations of, 561–62
principal-agent problem and, 147
profitability of, 562
structure of, 561
Vesting requirements, for pension
plans, 538
Veterans Administration (VA), 284,
330, 335
Vipers, 307
Virtual banking, 460–61
Visa, 459
Volcker, Paul A., 200, 203n, 229, 449
Volcker Rule, 449
Voting rights, of stockholders, 303
W
Wall Street Journal, 9, 23f, 85, 156
“Commodities,” 594
“Credit Markets” column, 82, 83
“Currency Trading,” 365–66
Dow Jones Industrial Average, 318
financial futures contracts published
in, 597
foreign exchange rates, 347t
“Futures Prices,” 604
“Heard on the Street,” 127
“Investment Dartboard,” 120–21, 127
“Markets Lineup,” 318
“Money Rates,” 274
yield curves, 96, 97
Wall Street Week, 308
I-22
Index
Washington Public Power Supply
System, 287
Weak-form efficiency test, 123n
Wealth
asset demand and, 64, 65
bond demand curve and, 72–74, 73t
demand curve for bonds and, 72–74
Web. See Internet
Webvan, 563
Welch, Jack, 563
Wells Fargo, 259, 460–61
Wharton Econometric Forecasting
Associates, 84
Whole life insurance policies, 520, 521
Wholesale markets, 255
Wingspan, 461
World Bank, 381, 384
WorldCom, 142, 157
World equity funds, 497
World Trade Association (WTO), 381
World Wide Web. See Internet
Y
Yield curves
bond interest rates and, 96–97
defined, 96
evidence on, 106–7
expectations theory and, 101–2
forecasting interest rates with, 108,
110–12
gap analysis and, 583
interpreting, 108–9
inverted, 96–97
liquidity premium theory and,
104, 106
market segmentation theory and, 103
shape of, 96–97, 106, 108, 110, 113
Yield to maturity, 36, 40–47
bond prices and, 294–95
coupon bonds, 42–46
defined, 40, 296t
discount bonds, 46–47
fixed-payment loans, 41–42
simple loans, 40–41
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