Introduction to Finance

f,
84
Board of Governors, 82
f
chair, role, 83, 84–86
defined, 83
draft acceptance authorization, 149
branch banks, 83
check clearance, 96
characteristics, 77–78
components, 80
consumer, relationship, 94
consumer protection responsibilities, 94
f
defined, 77
discount rate, defined, 89
district banks, 80, 82–83
directors/officers, 82–83
districts, check clearance, 93–94
establishment, 57
float, 123–124
impact, 115
lending rate, bank prime rate changes 
(differences), 90
f
map, 82
f
notes, circulation, 122
open-market operations, 224
operations, public discussions, 86
organization, 81
f
policy instruments, 87
problems, 100–101
quantitative easing, 224
Regulation Q, 57
regulatory responsibilities, 94
reserve requirements, 61
service functions, 95–99
structure, 80–86
supervisory/regulatory functions, 93–94
supervisory responsibilities, 93–94
transactions, 122–124, 122
f
U.S. banking system, 77–78
Federal Savings and Loan Insurance 
Corporation (FSLIC), deposits 
(insuring), 60
Federal statutory debt limits, defined, 173
Federal Trade Commission Improvement 
Act, 94
f
Fiat money, 132
defined, 30
paper currency, 30
usage, reliance, 31
Fiat U.S. paper currency, example, 30
f
Field warehouse, defined, 513
Exchange rates
behavior, impact, 288
developments, 142–143
large-scale arbitrage activities, impact, 141
quotations, 136–137
Exchange rate system
fixed exchange rate system, 132–133
flexible exchange rate system, 133
Exchanges, competition, 322
Exercise price (strike price), defined, 336
Expectations theory, defined, 205
Expected cash disbursements, 465
Expected future cash flows, present value, 284
Expected rate of return, calculation, 359
Expected return
calculation, 352–353
expected risk, trade-off, 364
Exporter
bank, financing, 147
borrowing amount, 147
financing, 147
Export-Import Bank, 150
defined, 150
Extendable notes, defined, 264
Extensible markup language (XML), usage, 484
External financing requirements, 444–445
External funds, amount (requirement), 444
ExxonMobil, stock price (changes), 577, 578
f
F
Facebook IPO, 303–306
lock up provisions, 304–305
road show, 304
Face value (par value), defined, 255, 267
Factor, defined, 508
Factoring, usage, 509–511
Fair Credit Billing Act, 94
f
Fair Credit Reporting Act, 94
f
Fallen angels, 259
Family business/venture, 194, 386
FCPA. 
See
Foreign Corrupt Practices Act
Federal budget
defined, 107, 171
powers, 110–112
Federal debt
functioning, 171
management, 108
Federal Deposit Insurance Corporation 
(FDIC), 71, 93
creation, 60
Federal Deposit Insurance Corporation 
Improvement Act of 1991 (FDICIA), 60
Federal funds, 471–472
defined, 35
example, 472
t
rates, 472
f
defined, 92
Federal government
dollar (fiscal year 2011), 172
f
receipts/expenditures, 171–173
tax revenue reliance, 171
Federal Home Loan Bank Board (FHLBB), 60
Federal Home Loan Mortgage Corporation 
(FHLMC) (Freddie Mac), 108
creation, 184
defined, 78
Electronic Fund Transfer Act, 94
f
Electronic payment mechanism, usage, 478
Emergency Economic Stabilization Act of 
2008, 109
Emerging growth companies, 503
Employment Act 1946, 103
Employment levels, 104
Enhancement, defined, 541
Entrepreneurial finance, defined, 6
Equal Credit Opportunity Act, 84, 94
f
Equilibrium exchange rate, 138
Equipment trust certificate, defined, 262
Equity
defined, 393
examination, 397
issuance, 181
multiplier, calculation, 433
private placements, 306
variations, 592
Equity capital
defined, 387
ratio, calculation, 69–70
Equity securities, defined, 15
Equity securities markets, defined, 15
Estimated spread, 261
Ethical behavior, defined, 10
Ethics, importance, 404–405
Euro, 133
defined, 40, 134
free float, 133
paper currency, design (difficulty), 134
percentage change, calculation, 138
value, decline, 138
Euro-denominated debt investments, debt 
investment conversion, 139
Eurodollar bonds, defined, 259
Eurodollar deposit liabilities, origin, 473
Eurodollar market, U.S. bank entry, 473
Eurodollars, 473
Europe, unification, 133–135
European Central Bank (ECB), 135
bond purchases, 134
defined, 98
European Community (EC), 133
European Economic Community 
(EEC), 133
European Economic Union, policy makers, 
106–107
European Monetary Union (EMU), 106
euro, free float, 133
European Union (EU), 106
defined, 133
financial crises, 134
Eurozone members
defined, 134
goods/services, demand (increase), 139
Ex ante, defined, 350
Excel
built-in financial functions, 223
NPER financial function, usage, 238
Excess reserves, defined, 87, 121
Exchage rate movements, 160–161
Exchange rate risk, 349
defined, 283, 349
Exchange rate risks, global business, 
158–161

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INDEX
625
Firm
assets, 590–591
commitment underwriting, flowchart, 
301
f
control of, 593
delaying tactics, 407
financial strategy, execution, 404
financing policy, 590–591
goals, 402–405
income statement, risk sources, 349
t
owner/managers, 404
receivables, examination, 508–509
size/age, impact, 496
value, example, 584
f
Firm-specific risk, 363, 364
t
First Bank of the United States, 55
First USA Inc., Merrill Lynch ownership, 303
Fiscal policy
defined, 105
determination, 171–172
economic effects, 111–112
formulation, 107
impact, 111
makers, 171–172
stimulation, 185
Fixed assets
current assets, mixture, 495–496
explanation, 395
management, 522