UA FI 301 - Chapter 4 Part 1 Functions of the Fed (9 pages)

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Chapter 4 Part 1 Functions of the Fed



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Chapter 4 Part 1 Functions of the Fed

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functions of the fed, interest rates


Lecture number:
6
Pages:
9
Type:
Lecture Note
School:
University of Alabama
Course:
Fi 301 - Intro Financl Instit Mkt
Edition:
1

Unformatted text preview:

Finance 301 1st Edition Lecture 6 Outline of Last Lecture I Why debt security yields vary II Yield Curve III Yield Differentials IV Yield Differentials On Money Market Securities V Yield Differentials On Capital Market Securities VI Estimating Appropriate Yield Outline of Current Lecture VII Organizational structure of the Fed VIII How Fed Controls Money Supply IX How Fed operations effect interest rates X Adjusting Reserve Requirement Ratio XI Adjusting the Fed s Loan Rate XII Feds Lending Role During Credit Crisis XIII Global Monetary Policy Current Lecture I Organizational structure of the Fed a Federal Reserve district banks i We have 12 federal reserve district banks they keep up with their region and regulate them keep up with employment inflation and price levels in their area ii Charter with the federal reserve then they get shares in the federal reserve and become a member bank can be up to 6 dividend iii The jobs are they loan money to member banks and they buy and sell treasuries with their banks and they also replace currency in the circulation for example if they are too damaged to use and they can print new money into economy and they also clear checks b Member Banks i Commercial banks 35 of the banks in this country other 65 percent are state charter banks this means that the state they are charter with regulates them instead of the federal reserve federal deposit insurance ii FDIC insure your checking account up to 250 000 got changed recently used to be 100 000 iii c Board of Governors i 7 people ii They are appointed to 14 year terms by the president and they are staggered every 2 years We give them 14 years because you cant have major changes the economy would go haywire politics wont be involved presidents will come and go and they cant influence these people that much Don t want your politicians influended easily iii Janet yellen alabama iv Vice chairman goes and reports to congress and tell them what theyre working on d Federal Open Market



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