Solution Manual For Money, Banking and Financial Markets, 6th Edition Stephen Cecchetti and Kermit Schoenholtz Chapter 1-23
Chapter 1 An Introduction to Money and the Financial System Problems 1. List the financial transactions you have engaged in over the past week. How might each one have been carried out 50 years ago? (LO1) Answer: Commercial purchases that you made likely used credit cards and debit cards. Fifty years ago, they would have all used cash. Payment of utilities (if you do it) might have been done by electronic transfer, rather than a check (which would have been the method 50 years ago).
2. How were you, or your family or your friends affected by the failure of the financial system to function normally during the financial crisis of 2007-2009? (LO1) Answer: It is likely that you or someone you know had an account with one of the many financial institutions that folded during the crisis, or that someone you know was refused a business loan or a mortgage or had a bank foreclose on their house.
3. List three items you used to buy with cash, but you now purchase with a debit card. (LO1) Answer: Among the possibilities: purchases of cappuccino at the local coffee shop, gasoline for your car, and groceries for the week.
4. Various financial instruments usually serve one of two distinct purposes: to store value or to transfer risk. Name a financial instrument used for each purpose. (LO1) Answer: Financial instruments used to store value include bank accounts, stocks and bonds. Instruments used to transfer risk include car insurance and life insurance. 5. Financial innovation has reduced individuals’ need to carry cash. Explain how. (LO1) 1-1 © 2021 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.