Reference no: EM131689115

Assignment

1. Describe the idea of "Financial Information Product (FIP)." Explain how the competitive operations of the institutions of the banking industry and financial markets create Financial Information Product, and why this is important? How does the rational investor acquire and discriminate between various packages of FIP which are available?

2. Why are asset prices and interest rates inversely related? Utilize at least one of the Four Simple Types of Credit Market Instruments to rationalize your argument. What is important to keep in mind about the idea of the "present discounted value" when it comes to financial decision-making?

3. Slow up fast down Assess Prof. Dover empirical observation that macroeconomic activity in general, and equity markets in particular, seem to show a pattern of SLOW UP FAST DOWN. Is this accurate? Explain. Construct a counter-argument: what would have to happen, how would economic and financial activity have to work in order to have a pattern of FAST UP SLOW DOWN? How plausible is this reverse narrative and are there important lessons for the investor to keep in mind from this argument between the two characterizations? Explain.

4. We have reviewed the basics of Monetary Policy Making. Provide a description of three important points about monetary policy making, and explain why each is important.