Week Six Homework | Course Paper

Week 6; Capital Markets (versus Money Markets) and Selection

of a Topic for your editorial

Week 6 Discussion; Capital Markets and Selection of Topic for Writing

This Discussion is in two parts

The first part of the discussion relates to a new focus on capital markets

(from money markets). How does this focus change our learning and

perspective?

The second part is your consideration and topic selection and mental

preparation for the two part editorial writing due in Week 6 and 7. I have

attached some ideas on controversial topics in M and B to this thread. You

can use one of these and others of interest to you.

Part I Capital Markets

To date, we have looked at the ‘Banking’ in Financial Intermediation as

COMMERCIAL BANKING. Recall that financial intermediation is the process by

which excess liquidity (money) in the economy flows

NET SAVERSèNET BORROWERS

If we look around at brick and mortar banks, we see them taking deposits and

making loans, so often that is our first impression.

Note the compare and contrast of higher Blooms here.

I were standing in front of you on a white board, I would point out that the

reading in PART 5, Financial Markets is an INSTRUMENT approach while PART

7 Financial Institutions are just that, an INSTITUTION approach to M and B.

We will explore the documents that reflect the instruments between ‘saver

and borrower’ in Week 6

• T bills

• short and long term Federal, State and Municipal lending

• commercial paper

• Repurchase agreements

• Stocks, indices of equity markets, exchanges, ETF

• Mortgages/primary and secondary

The final weeks of the class however, focus on other MARKETS and other

INSTITUTIONS.

In Week 6 consider that the Net Savers and Net Borrowers take on new

identities through evaluation of CAPITAL markets (bonds, mortgage, and

equities) versus money markets.

The objectives of this discussion is to dive deeper into the instruments and

characteristics of the CAPITAL MARKET

I would like to leave this discussion a free form and your response to the

reading. The following are guiding questions. You don’t have to answer each

question in the ‘guide’. Use it to Ponder, consider, explore, and move deeper

into the parts of the reading that spark comment, consider areas of your

interest or participation in capital markets.

List URLS or current events as they come across your desk with the objective

of educating us all into the nuances of your sub topic selection.

The commonality is a ‘what did you learn’ statement. What one thing was

new or exciting for you. Pass it on to us all.

So some guiding questions; Pick and Choose ONE of the following topics and

indicate that focus in the title of your initial thread and first sentence. NOTE

you don’t answer all of these. Pick ONE and expand.

1. Contrast between Money and Capital Markets. How are they

different? If I googled the term ‘cyclical investing’ what ideas come to

mind in terms of when a person should move from money to capital

market focus? What did you learn?

2. The stock market. What are the major markets (DOW, NASDAQ, S and

P) what is an ETF? Define efficiency. To what extent are these markets

‘efficient’ in re-patriating funds from borrow to users? What are 3

metrics we should look at in deciding to invest do you think? What are

the factors in selection of a stock or fund? What did you learn?

3. Choose an instrument in the reading this week (some listed

above). Define it. Who uses that instrument and how does it contribute

to financial intermediation and efficiency of that market? What did you

learn?

4. How is common stock priced? Define the Efficient Market

Hypothesis. Do you believe it is true? How does the validity of that

hypothesis add to efficiency of the equity market by small and large

investors? What did you learn?

5. Look up the term disintermediation. How is the mortgage market

becoming more ‘disintermediated’? or how are the traditional sources

of mortgage money changing? (new names and faces in mortgages and

refinances). Or why are re financings so prevalent? What did you learn?

6. How does the secondary mortgage market work? Who are FREDDIE MAC

and SALLIE MAE? What roles of efficiency do ‘secondary markets’

undertake? What did you learn?

PART II Week 6 Writing; Topic Ideas

I have started a new thread iwith FAC NOTES TO LEARNERS titled,

“Controversial Issues in Banking“ These are a start list for your topic

selection.

You can insert Part II with Part I or start a new thread later. Indicate the

following

What topic are you currently exploring for the writing in Week 6?

Why did this topic strike you as interesting?

See the Two part writing in Week 6 and 7 in the Assignments Tab. Also see

WC/Content/Week 6 for the outline and deliverable for Week 6. Note that

Week 6 writing requires

• Research into editorial formats and objectives as opposed to academic

writing

• Selection of a topic

• Draft out a process and introduction to your editorial due Week 7

• Use the writing to gather facts, arguments, sources and material for

your final Editorial

I have posted out some controversial issues within the realm of M and

B. Email me if you want clarification or have other ideas you might want to

explore.

Following the directions of your facilitator, post your response in the Forum

and respond to two of your colleagues. Post out your initial post by end of

your day on Wednesday. Reply to two other peers by end of your day Friday.

The stock market. What are the major markets (DOW, NASDAQ, S and P) what

is an ETF? Define efficiency. To what extent are these markets ‘efficient’ in

re-patriating funds from borrow to users? What are 3 metrics we should look

at in deciding to invest do you think? What are the factors in selection of a

stock or fund? What did you learn?

The major markets provide investors with snapshots of groups of stock indexes:

• DOW~ or the Dow Jones Industrial Average is the stock market price weighted index

of 30 of the most prominent and influential public companies. These companies are

considered blue–chip, or the corner stone of the industry being, normally, the safest