Question: Please answer ECO 352 Money and Banking Part Two Study Topics 1. Explain the forces of supply and demand in determining the equilibrium interest rate.

Please answer ECO 352 Money and Banking Part Two Study Topics

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ECO 352 Money and Banking Part Two Study Topics 1. Explain the forces of supply and demand in determining the equilibrium interest rate. 2. Discuss the rational expectations theory of interest rates. 3. Discuss the investment decision. 4. Discuss the role of the stock market in the economy. 5. Discuss the structure of interest rates starting with the risk free rate of interest. 6. Discuss how calculation of the interest rate can alter the real rate of interest. 7. What is the default risk and why is it so critical to financial institutions 8. Discuss junk bonds. 9. Explain subprime mortgages giving advantages and disadvantages. 10. Discuss segmented-markets and the preferred habitat argument. 1 1. Explain how taxation affects the return on financial assets. 12. Explain interest rate swap; how they work and why they are used. 13. Discuss derivatives and how they are used. 14. Using the Keynesian income and spending diagram show the impact of the cost of money on the economy. 15. Give four risks associated with financial assets, briefly describing each. 16. Of the interest rates you found, explain why the same individual might be paying different rates on the same amount of money

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1. Identify your reference point when making a decision based on an element of risk.

3. If there are reasonable alternatives, think about your decisions based on the different reference points and see if there are any contradictions in the decisions.

4. It is only at this point that you can give the problem your full attention in relation to the various ways you have framed the problem.