1) Evaluate why secondary capital markets play an important role in our economy and summarize how secondary markets assist the primary market?
2) Explain why changing the discount rate is not a viable tool for conducting monetary policy.
3) Evaluate how price expectations influence the level of interest rates? Explain the impact inflation premiums have had on interest rate levels in recent years.
4) Explain and examine interest rate risk. Identify the two risk components of interest rate risk and explain how these interact with each other.
5) Summarize the term structure of interest rates and analyze how this can be used to help forecast future interest rates.
6) Identify the fundamental characteristics of money market debt instruments. Evaluate why these characteristics are important to money market participants who are investing in financing.
7) Analyze why U.S. Treasury STRIPs are of interest to individuals with IRA's or 401k pension plans.
8) Determine and explain why mortgage-backed securities guaranteed by Federal government agencies often have yields above U.S. Treasury bond rates.