26-7b Pension Fund’s Bond Portfolio Performance, 665
26-7c Evaluation of Pension Fund Performance, 666
Part 7 integrative Problem: a ssessing the influence of Economic Conditions across a Financial Conglomerate’s units, 670
Final review, 671
appendix a: Comprehensive Project, 677
appendix B: using Excel to Conduct analyses, 687 g lossary, 691 index, 703
Preface
Financial markets finance much of the expenditures by corporations, governments, and individuals. Financial institutions are the key intermediaries in financial markets because they transfer funds from savers to the individuals, firms, or government agencies that need funds. Financial Markets and Institutions, 13th Edition, describes financial markets and the financial institutions that serve those markets. It provides a conceptual framework that can be used to understand why markets exist. Each type of financial market is described with a focus on the securities that are traded and the participation by financial institutions. Today, many financial institutions offer all types of financial services, such as banking, securities services, mutual fund services, and insurance services. Each type of financial service is unique, however. Therefore, the discussion of financial services in this book is organized by type of financial service that can be offered by financial institutions.
intended Market
This text is suitable for undergraduate and master’s-level courses in financial markets, or financial institutions. To maximize students’ comprehension, some of the more difficult questions and problems should be assigned in addition to the special applications at the end of each chapter.
Organization of the text
Part 1 (Chapters 1 through 3) introduces the key financial markets and financial institutions, explains why interest rates change over time, and explains why yields vary among securities.
Part 2 (Chapters 4 and 5) describes the functions of the Federal Reserve System (the Fed) and explains how its monetary policy influences interest rates and other economic conditions. Part 3 (Chapters 6 through 9) covers the major debt security markets, Part 4 (Chapters 10 through 12) describes equity securities markets, and Part 5 (Chapters 13 through 16) covers the derivative security markets. Each chapter in Parts 3 through 5 focuses on a particular market. The integration of each market with other markets is stressed throughout these chapters. Part 6 (Chapters 17 through 20) concentrates on commercial banking, and Part 7 (Chapters 21 through 26) covers all other types of financial services provided by financial institutions.
Courses that emphasize financial markets should focus on the first five parts (Chapters 1 through 16); however, some chapters in the section on commercial banking are also relevant. Courses that emphasize financial institutions and financial services should focus on Parts 1, 2, 6, and 7, although some background on securities markets (Parts 3, 4, and 5) may be helpful.
Professors may wish to focus on certain chapters of this book and skip others, depending on the intended coverage of the course they are teaching. Chapters can be rearranged without a loss in continuity. Regardless of the order in which chapters are studied, it is highly recommended that some questions and exercises from each chapter be assigned. These exercises may serve as a focal point for class discussion.
Here there was nothing that did not date from the remote past, nothing that was not of use in the immediate present.
So is it with the beavers and the ants and the bees, whose work ever advances from the time of Nineveh and beyond, yet never advances to the future, who build as they built, who live as they lived, who die as they died, and as first they built and lived and died in the garden of God, which is Nature.
Only man can change, only man can live for ages without change, yet remain capable of change, only man can be sealed away in the land of instinct, yet remain capable of entering the land of reason.
So was it with the people of Karolin gathered together this morning on the beach by the gridiron of coral where for ages past victims had been sacrificed to Nanawa, the shark-toothed one, by his priests and through the agency of his servants, the sharks.
Le Juan, after the death of Uta Matu, had temporised. She did not in the least mind sacrificing the half-witted girl Ooma, but she greatly dreaded barren results.
Including the king’s wives, there were over two hundred women on Karolin, all wanting their men back, and close on three hundred children, more than half of which were boys. Of these boys a large number were over twelve and a good number over fourteen, all ripe for mischief, without much fear of Nanawa, and with the antagonism of all boys towards old women of Le Juan’s type.
Le Juan had sent the fathers and husbands of this terrible population to a war from which they had not returned, and, worse than that, she had made herself responsible, under Nanawa, for their return.
She had declared that they were “held” by Nanawa till the great sacrifice of a woman had been offered to him, yet, feeling that the tricky shark god had played her another trick, she simply dared not make the sacrifice. She knew what would happen if it failed; she felt the temper of the people as a man feels the sharp point of a dagger against his breast, so, as before said, she temporised, fell into pretended trances, had pretended visions, declared that nothing was
to be done until it was absolutely sure that the mother of Ooma would not return, and sweated consumedly at night as she lay in her shack listening to the sounds of the village and the shouting of the ribald boys and the boom of the surf on the reef, whilst Ooma, halfwitted and happy, slept protected from death by the ferocious beast that was the soul of Le Juan and whose one dread was extinction— through failure.
But the time had come, and the death warrant was sealed by the far red speck of light on the northern sky caused by the burning of the schooner.
A boy had seen it, two minutes later the whole village was watching it, and next day it had got into the minds of the people. It was looked on as a sign—of what, no one could say—but it was an angry sign, and that night Nalia, the chief wife of the dead Uta, had a dream.
She dreamt that Uta appeared to her and that the red light was his wrath that the great sacrifice had not been made. He also declared that if it was not made at once, worse would befall Karolin. That was the end. Before dawn Le Juan, dragged from her hut to hear the news, gave in, and as the sun broke above the lagoon the preparations began.
Ooma, awakening to another happy day of life, was anointed and rubbed with palm oil to make her acceptable to the god. She laughed with pleasure. She was of the happy half-witted kind with sense enough to know that she was being fêted; when they put flowers in her hair she laughed and laughed, and when they led her by the hand to a suddenly prepared banquet where she alone was the guest, she went laughing, the boys dancing around her and shouting: “Karak, O he, Ooma, karaka.”
The last of the tide was flowing out of the lagoon when, the banquet over, Le Juan, taking the hand of Ooma, led her along by the waterside, followed by the whole population of Karolin.
By the break great sheets and coils of glass-smooth water, pale as forget-me-nots, could be seen moving between the wind-flaws
where a half-dead breeze touched the surface; ahead of the advancing crowd the gridiron of coral lay almost entirely uncovered by the tide.
Nature, with that assistance which she sometimes lends to inhumanity, had tilted this terrible shelf so that the gradually rising water would take the victim to the waist at greater flood; art had driven in iron bars for the binding.
At quarter-flood or before, the sharks, who always knew what was going on, instructed maybe by Nanawa, would begin their struggle for the prize.
As the procession approached the gridiron, Ooma suddenly began to hold back.
Some instinctive warning had come to her that danger lay ahead, that all things were not as they pictured themselves to be; that the flowers and the feasting and all the splendours of that most glorious morning of her life were veils of illusion behind which lay Terror.
She stopped, trying to release her hand from the grip of Le Juan, then, struggling with her captor, she began to scream. They seized her, still screaming, and brutally cast her on the coral, binding her to it by each thigh, by the wrist and by the shoulders. Then, as she lay there half-stunned, voiceless, and staring the sky, suddenly from the great ring of the atoll rising to heaven like a protest, came a sigh, profound from the very heart of the sea. It was the turning of the tide.
east, whilst Dick handed her food and water from the beaker, eating scarcely anything himself.
His eyes were fixed on the far-off shore to starboard, the endless shore that showed nothing but gulls and palms, foam jets when a greater breaker broke on the coral, all seen against air luminous with the dazzle of the vast lagoon.
And now, still following the turn of the reef, Katafa pointed ahead where, far away past the northern pier of the break, the whole sea danced as the outpouring waters met the current, the last of the ebb rushing like a river, foam dashed, jubilant, green against blue, white against green and gulls over all, gulls wheeling and shouting and diving and drifting on the wind like turbulent spirits on the sun blaze. Katafa held on still steering due east as though to leave Karolin behind, on and on till the vast sea disclosed itself to the south and the turmoil at the break died and oiled away into the slack. Deep in the knowledge of those waters, she held on steering now to the southwest against the current; then, turning the boat at last, she made due west. The wind had freshened and backed to the east of north as if to help them, yet it was half-flood before the piers of the break showed clear before them, the water pouring in and lashing the coral, leaping on the outer beach and filling the air with its fume and song; great fish went with them, albacores leaping like whirled swords, bream, garfish, all in the grip of the mighty river of the flood.
And now the blue and blazing lagoon, where the fleets of the world might have harboured, flung out its mighty arms, the roar and thunder and spray of the breakers saluted them, and then, under a storm of gulls, the spray and thunder and torrent of the sea passed like a dream, and before them, across the untroubled waters, lay the white beach where Uta Matu had watched the dawn and the return of the fleet that never more could return.
The beach was crowded. It was half-flood, and the sharks had snatched away the last of the last offering ever to be made to the great god Nanawa. Steering for the beach, Katafa saw nothing but the crowd—women, children, boys, all lined by the water’s edge,
as he stood in the sunset on the reef with Katafa, and facing the line of the empty canoe houses.
Only yesterday he had stood armed with the pasht by the dead body of Le Juan whilst the people, listening to the words of Katafa, proclaimed him their chief; yet by this evening he had visited the canoe houses and had sent fisher-boys to the southern beach to fetch Aioma, Falia and Tafuta, the three old men, too old for war, but canoe-builders all of them, and holding between them the secret of the construction of the great war canoes.
For to Dick, standing with uptilted chin before the women and the children and the boys who, with the sure instinct of children and women and boys, had seen in him their ruler, a vision had come, God-sent, of the world that lay beyond the world he knew. He had seen again Ma in the moonlight, and the spear of Laminai, the redbearded man he had put to death, and, the black-bearded man chased through the woods, the burning schooner and the ape-men who still held the beach of Palm Tree; and as he looked on Katafa, on the women and helpless children, on the boys growing towards war age but still unripe, the great knowledge came to him, as it came to the earliest men who fronted the wolf, that strength is possession, and that without possession love is a mockery—that dreams based on unreality are dreams.
They turned from the canoe houses and came along the reef. Here, on the outer beach, the village far behind them, they sat down to rest.
It was the first time they had found themselves alone since leaving Palm Tree. All last night the village had hummed around them, bonfires burning all along the coral and bonfires answering from the southern beach, conch answering conch, whilst the great stars watched and the breakers thundered as they had thundered at the coming of Uta Matu to power, of Uta Maru, his father, and all the line of the kings of Karolin stretching to the remote past, but never beyond the voice of the sea.
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