...impact on the economy. There were clues that the economy may have actually slightly contracted instead of expanding. “The United States economy reversed course in the final quarter of 2012 and contracted at a 0.1% rate and was the worst performance since the financial crisis in 2009.” (Mataconis, 2013) . Even with the overall contraction, the economy is not on the brink of a recession or an extended slump. Companies are still spending. The economy we have been living in since 2009 is going to be the new normal. The prime rate is the underlying index for most credit cards, home equity loans and lines of credit, auto loans, and personal loans. The current prime rate is 3.25%, federal discount rate is 0.75%, fed funds rate is 0.25%, and the 11th District cost of funds is 1.071%. Changes made with federal funds rate and the discount rate also dictate changes in the Wall Street Journal prime rate, which is the interest to borrowers. (Bankrate.com, 2013) The current fixed interest rate for credit cards is 13.02% and for variable interest rate for credit cards are at 15.14%. “The unemployment rate falls to 7.8% as the economy creates 114,000 jobs.”...
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...The Current Financial Environment FIS/260-Financial Markets & Institutions: You Can Bank On It Michael Ricks When I first took a look at this assignment I thought it would be easier than it this. I looked for days on the internet trying to find banks or depositories with credit cards with variable interest rates. What I found was many banks with many credits all with annual percentage rates (APR). So to keep my insanity I just looked at three commercial banks. I looked at Bank of America, US Bank, and Regions bank. I looked at all their credit cards student, business, rewards, and secured. Bank of America credit cards Apr varied anywhere from 12.99% to 20.99%. Here is how they get people, 0% introductory APR for the first 12 billing cycles only for purchases. When that cycle ends your rate will depend on your creditworthiness. US Bank does similar and their rates are from 11.99% to 23.99%. Regions is in the same neighborhood starting at 13.99%, 16.99%, or 19.99% based on credit, but can quickly climb to 24.99% or even 29.99%. Every bank I researched, including credit unions, all based the rate that you would receive on your creditworthiness when you open your account. After that, your APR will vary with the market based on the Prime Rate as set out in the Variable-Rate information section of your agreement. The current annual percentage rate (APR) for a new car can vary from bank to bank, amount to amount, and year to year. It is not something that is...
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...September. Both index increases infer growing confidence and positive expectation in current policy. These data will translate to more spending in the aggregate leading to more employment with the probability of increased productivity to supply the demand for goods and services. Consumer Income The US Department of Commerce Bureau of Economic Analysis (BEA) reports personal income increased 0.2 percent for the month of September 2014, and disposable income rising 0.1 percent during the same period. Of note, personal expenditures dropped 0.2 percent equaling this increase. Tis effectively negates any positive contribution to aggregate demand, and in fact, has potential to create an over-supply of goods and services. Interest Rates The Federal Reserve reports no significant changes in key interest rates during the past three months. The...
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...nt-Financial-Environment Final Project: The Current Financial Environment Research and compare the following services provided by three different commercial banks or other depository institutions: the current interest charged on a variable credit card account, the current annual percentage rate for a new car, and the current interest rate on a year fixed mortgage. List the depository institutions and each separate rate. Research and answer the following questions: What is the current prime rate? What is the current federal funds rate? What is the current Fed discount rate? What is the current GDP? Discuss, in a 1,050- to 1,400-word analysis of your findings, the current financial situation, and explain in detail how the federal funds rate and discount rate are related to the prime rate, and how the prime rate in turn is related to the services provided by the banks you researched. Address the following points in particular: a. The date of the last federal funds rate increase or decrease b. The amount of the increase or decrease c. The rational behind the latest increase or decrease d. The effect of the increase or decrease on the overall economy and upon you as an individual. Do not include any specific personal financial data. Cite your sources. Post your analysis to the Assignment section as an attachment. For more Assignments visit:...
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...This summary of the most recent report of the Federal Reserve shows steady growth in regards to the strength of the economy, but slightly less aggressive than last year. It is noted that payroll employment has increased by 210,000 on average per month in comparison to 260,000 last year. The unemployment rate dropped by a quarter percent to 5.3 percent in June. It is estimated that labor market resources are not being fully utilized because part time employees looking for full time remains high even though slightly decreasing. Consumer price inflation remains below the FOMC’s goal of 2 percent. The price index of consumer spending increased a quarter percent since last May. This in part is affected by lowered gas prices. Long run inflation estimates have remained stable and real gross domestic product has been little changed since last year in this first quarter. It is expected that inflation will rise to the expected level in the near future. Longer-term interest rates have increased since last year and auto and student loan balances continue to grow higher. This seems similar to the increase in housing loans in the prior decade. Hopefully the amount of default loans will not arise from poor bundling packages. Borrowing by lower rated businesses has increases rapidly as well. It has maintained to implement a low rate for the Federal Funds rate varying from 0-.25 percent. It plans to raise the federal funds rate once employment figures are up to par and the inflation...
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...risk premium can be an individual stock or the overall stock market provides over a risk-free rate. And the size of the premium will be a standard to compensate with a higher premium in the stock market. Thus, a portfolio manager when the equity risk premium increases in the future， the investors will sell out stock market because the stocks are over priced. So the legislators and pension administrators decide how much to set aside to meet future pension obligations, based upon assessments of equity risk premiums. However the history data of ERP (Equity Risk Premium) from Federal Reserve System shows it keeps low and stable state but increases suddenly since 2006. At the same time the Federal Funds Effective Rate goes down and keeps low state. We know that interest rate is a way to control inflation. Inflation is a factor causes too much money chasing too few goods. “Changes in the federal funds rate affect the behavior of consumers and businesses, but the stock market is also affected,” Said by Jim Mueller (2013), PhD Finance in Washington State University. “As the risk-free rate goes up, the total return required for investing in stocks also increases.” In other words, the "risk-free" rate of return goes up, making these investments more desirable. But is the low interest rate push the equity risk premium rate goes up?...
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...How has the Economy Affected The Way Federal Managers Reward Their Staff? Tonya R. Johnson University of Maryland University College Professor Kuyatt Executive Summary This research paper provides an analysis and evaluation of the current state of the federal government budget and how federal employees are being affected. The methods of analysis include information on causes of the financial crisis the government is experiencing, the impact, program cuts and the burden it is having on federal workers including low morale. Other information show the various programs cut over the past 3 years and how employees are coping with this stress of footing the bill for the American people. Results of information provided show how employers can be creative and reward their staff in other ways besides monetary. Time-off awards in the form of 59 minutes, offsite work retreats used as team building exercises, and thank you and little awards from managers to show their employees appreciation and how they are valued. This research paper shows the difficulties managers face in tough economic times, but provides examples on how managers can turn situations that look hopeless in positive elements. Recommendations included: providing valuable feedback, discussing how best to deal with the work, allowing employees to be part of developing a solution to accomplish the mission, listening to their concerns and rewarding them no matter how small for their efforts. This research...
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...2 FIS 260 Week 3 Assignment: The Federal Reserve System FIS 260 Week 3 CheckPoint: The Fed Discount Rate and Federal Funds Rate FIS 260 Week 4 CheckPoint: The U.S. Treasury FIS 260 Week 4 DQs part 1 of 2 FIS 260 Week 4 DQs part 2 of 2 FIS 260 Week 5 CheckPoint: Development of the International Monetary System FIS 260 Week 5 Assignment: International Trade FIS 260 Week 6 CheckPoint: The Interest Rate FIS 260 Week 6 DQs part 1 of 2 FIS 260 Week 6 DQs part 2 of 2 FIS 260 Week 7 Assignment: Risk and Diversification FIS 260 Week 7 CheckPoint: Rates of Return FIS 260 Week 8 CheckPoint: Capital Budgeting FIS 260 Week 8 DQs part 1 of 2 FIS 260 Week 8 DQs part 2 of 2 FIS 260 Week 9 Capstone CheckPoint FIS 260 Week 9 Final Project: The Current Financial Environment Activity mode aims to provide quality study notes and tutorials to the students of FIS 260 COMPLETE CLASS in order to ace their studies. FIS 260 COMPLETE CLASS To purchase this visit here: http://www.activitymode.com/product/fis-260-complete-class/ Contact us at: SUPPORT@ACTIVITYMODE.COM FIS 260 COMPLETE CLASS FIS 260 Week 1 Assignment: The Monetary System FIS 260 Week 1 CheckPoint: The Four Pillars and the Components of Finance FIS 260 Week 2 CheckPoint: Functions of the Banking System FIS 260 Week 2 DQs part 1 of 2 FIS 260 Week 2 DQs part 2 of 2 FIS 260 Week 3 Assignment: The Federal Reserve System FIS 260 Week 3 CheckPoint: The Fed Discount Rate and Federal...
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...This would be a valuable source because it contains a large amount of information in one location. There are several divisions that collaborate to complete an accurate economic forecast which include. These divisions include national, international, regional, industry, and integrate accounts, all of which include national income and product accounts, and the gross domestic product to name a couple (U.S. Bureau of Economic Analysis 2013). Current Data Resource A possible resource for current information can include the Federal Reserve Economic Data (FRED). FRED is an online database that includes economic data from several different srouces. FRED was developed by the research department at the Federal Reserve Bank of St. Louis. The database combines data with other tools to help the user understand, interact, and display data. This can be a valuable resource because it allows the used to gain information but also to be able to create “data stories” (Federal Reserve Bank of St.Louis, n.d.). Conclusion Many resources exist for finding...
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...fedrThe Federal Reserve Policy from 1999 to the Present: The monetary policy of the United States has two basic goals that are outlined in a 1977 amendment to the Federal Reserve Act. These basic goals are: to promote "maximum" sustainable output and employment while promoting "stable" pricing [1]. It has become the responsibility of the Federal Reserve Board to try in: Maintaining the stability of financial systems and contain risk that may arise in financial markets. Regulating banking to ensure safety and soundness protecting the consumer from harm while using credit and banking services. Overseeing the nation's payment systems providing financial services to financial institutions, the U.S. government, and foreign institutions. Stabilizing world pricing and creation sustainable employment. While the Federal Reserve Board is in a constant challenge to perform these above tasks. The economy goes through business cycles where the output of goods and services and the employment rate of the country are above or below their long running levels. The term "monetary policy" refers to what the nation's central bank or Federal Reserve happens to administer so that they may influence the amount of money and credit in the U.S. economy. What happens to this money or the credit during this time will directly affect the interest rates and the performance of the U.S. economy and its people. Stabilizing the U.S. economy has become paramount for the Federal Open Market...
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...to Federal Reserve Policy? Ben S. Bernanke Kenneth N. Kuttner∗ February 7, 2003 Abstract This paper analyzes the impact of unanticipated changes in the Federal funds target on equity prices, with the aim of both estimating the size of the typical reaction, and understanding the reasons for the market’s response. On average over the May 1989 to December 2001 sample, a “typical” unanticipated 25 basis point rate cut has been associated with a 1.3 percent increase in the S&P 500 composite index. The estimated response varies considerably across industries, with the greatest sensitivity observed in cyclical industries like construction, and the smallest in mining and utilities. Very little of the market’s reaction can be attributed to policy’s effects on the real rate of interest or future dividends, however. Instead, most of the response of the current excess return on equities can be traced to policy’s impact on expected future excess returns. JEL codes: E44, G12. 1 Introduction The reaction of the stock market to monetary policy is clearly a topic of intense interest both to market participants and policymakers. Those holding equities would obviously like to know how possible Federal Reserve actions might affect the value of their portfolios. Similarly, an estimate of the likely effect of policy on asset prices is an important ingredient in assessing the transmission of monetary policy through the “wealth effect.” The size of and of Governors of the Federal Reserve System...
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...trusted the system,” or “I relied on somebody else’s judgment.” Some people blame the consumers for spending too much; some blame the banks for their lending practices, while others blame the credit agencies for their vague ratings. But by now, we are completely sure of one thing; the housing bubble was one factor that generated this financial crisis. So, who is to be blame for creating the housing bubble? According to John Taylor’s article, “How Government Created the Financial Crisis,” lax policies implemented by the Federal Reserve (Fed) caused the financial crisis. As a response to John Taylor’s opinion, Alan Greenspan’s article, “The Fed Didn’t Cause the Housing Bubble”, defends the Fed’s policies and places the fault on mortgage rates, such as long-term or fixed mortgages, as the real cause that triggered the Housing bubble. Even though John Taylor’s, a professor of Economics at Stanford, and Alan Greenspan’s, a former chairman of the Federal reserve, opinions are strongly supported by facts, I’m truly fed up of hearing excuses and finger pointing about the current financial crisis. The fact is that both the Fed’s policies and the rates on mortgages initiated the housing bubble, and I can’t reject either explanation. However I believe that it is time to start thinking about the future, thus, we should worry about how the Fed’s policies should be managed to stimulate the domestic and international US economy for the future. According to John Taylor, it’s the...
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...A New House- Risks and benefits By Laura Lorenzo University of Phoenix The government body that influences national fiscal policies that potentially affect the housing market is the Federal Reserve. The Federal Reserve is responsible for interest rates, and adjusting their rise and fall. It is also responsible for the amount of money you can borrow for your mortgage. This affects market pricing of homes. If you cannot afford to buy a home then there is less buyers and the market price of homes will decline. When the prices of homes decline more people are able to afford to purchase, and more people get loans, making a stable market once more. When rates decrease it allows more money to flow back into the market and then more buyers are able to get mortgages. If the rate is increased than buyers will less likely get the mortgage they need and the market will fall again. The overall value of homes will fall. The risks and benefits depend on the market at the time of purchase. Being aware of the interest rates and the overall value of homes when looking to purchase, it would be wise to consider each. Looking at the health of the market and the interest on mortgages is necessary when purchasing a home. You do not want to buy when interest rates are high. It is better to wait for interest rates to drop and buy when the market is full of available homes so that you can get a fair price with a low interest, making the home more viable in the future and less expensive...
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...see how I could apply them to my personal life. As for week three it was interesting and ready to blast into week four. Brigett This week we covered some very important and complex topics. We started off by defining the uses of money and the ways that money is created by banks. We looked at the monetary policies; how they work, what they affect, and how they are affected by different actions. We discussed the roles of the Federal Bank, the reserves, and the fed funds rates. The most interesting topic for me was the increasing and decreasing of interest rates and how such as simple act can affect our economy, and ultimately, our decisions as consumers. I cannot honestly say how these topics will affect me in a Human Resources role, as our Business Analysts are the ones who are concerned with the economic factors. Nikki After reading the chapter concerning the federal funds rate that is one job I would not want to have. There are so many moving parts that it seems almost unrealistic to be able to determine an accurate operating target. The federal funds rate seems to affect our...
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...Principals of Finance FIN-3005 June 3, 2014 Questions and Applications 7) Borrowing from the Federal Reserve: Describe the process of “borrowing at the Federal Reserve.” What rate is charged, and who sets it? Why do banks commonly borrow in the federal funds market rather than through the Federal Reserve? “Borrowing at the discount window” represents the borrowing by depository institutions from the Federal Reserve. The interest rate charged on these loans is known as the discount rate is set by the FED. Banks tend to prefer the federal funds market over the discount window because the Fed may monitory the bank’s reasons for borrowing. The Fed’s discount window is intended to accommodate banks that experience “unanticipated” shortage of funds. 9) Bullet Loan: Explain the advantage of a bullet loan. A bullet loan is a loan that specifies a date in the future in which the principal is paid off in a lump sum. This type of loan is useful for a borrower will have limited funds in the near future. 10) Bank Use of Funds Why do banks invest in securities even though loans typically generate a higher return? Explain how a bank decides the appropriate percentage of funds that should be allocated to each type of asset. Securities provide a bank with liquidity, because they can often be sold easily in the secondary market. In addition, many securities purchased by banks have low risk. Therefore, the securities can be used to minimize liquidity risk and...
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