Kirkpatrick and Dahlquist CMT1 Chapter 10

by Steve Kern on June 5, 2015

in CMT Level 1

Chapter 10: Flow of Funds

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Chapter Objectives
- Understand why knowledge of the flow of funds is important to determining stock market valuation
- Understand why liquidity plays an important role in potential stock market valuation
- Be familiar with measurements of market liquidity
- Understand the relationship between Federal Reserve policy and the cost of funds
Funds in the Marketplace
- Money Market Funds
- Margin Debt
- Secondary Offerings
Funds Outside the Security Market
- Household Financial Assets
- Money Supply
- Bank Loans
The Cost of Funds
- Short-Term Interest Rates
- Long-Term Interest Rates (or Inversely, the Bond Market)
Money Velocity
Misery Index
Fed Policy
- Fed Policy Futures
- The Federal Reserve Valuation Model
- Three Steps and a Stumble
Yield Curve
Conclusion
Review Questions