Difficult Terms
mortgage backed securities, Sarbanes-Oxley Act, deposit rate vs. bank lending rate, yield to maturity,
discount bond, commercial paper, asymmetric information, commercial bank vs. investment bank vs.
credit union, bond yield
Study these in Depth
Be able to explain differences in interest rates
Understand what financial markets do
Understand the differences in types of financial instruments (treasury bills, treasury notes, corporate
bonds, etc)
How the value of the currency impacts purchases you make
Properties of good money
Differences between M1 vs. M2
Understand how to do present value and future value calculations
The impact of inflation on interest rates
The factors that influence bond prices and how to price bonds
Understand the liquidity preference framework
The impact of expectations on interest rates
How to calculate liquidity premiums on multiyear bonds as well as the term structure