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Fundamentals of Corporate Finance by Robert Parrino

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2

The Financial System and the Level of Interest Rates

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Learning Objectives

images Describe the role of the financial system in the economy and the two basic ways in which money flows through the system.

images Discuss direct financing and the important role that investment banks play in this process.

images Describe the primary, secondary, and money markets, explaining the special importance of secondary and money markets to business organizations.

images Explain what an efficient market is and why market efficiency is important to financial managers.

images Explain how financial institutions serve the needs of consumers and small businesses.

images Compute the nominal and the real rates of interest, differentiating between them.

One of the most important institutional players in the financial system is the Federal Reserve ...

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