NEW FEATURES:

• Calculator hints for the in-chapter security valuation examples. These calculator hints assist the reader in the use of a financial calculator to solve the Examples.
• Updated Topic Coverage:
  • The order of Chapters 8 and 9 have been changed so that the major securities markets (money markets, bond markets, mortgage markets, and stock markets) are placed together before foreign exchange markets that affect all the securities markets are discussed.
  • The crash of the subprime mortgage market. Chapter 7 includes a discussion of the crash and the impact on finance companies that were deeply involved in this area of mortgage lending. Other chapters discuss the subprime mortgage market's collapse on various segments of the financial markets and financial institutions industry.
  • Expanded discussion of hedge funds. Chapter 17 covers these relatively unregulated investment companies that now manage over $2.78 trillion dollars in assets and have become a major sector of the financial institutions industry.
  • New discussion of venture capital firms. Unlike any other type of financial institution, these firms provide funding for new and small firms with no assets and business history that find it difficult to obtain debt financing from banks.
  • The impact of the devastating hurricane season in 2005. Chapter 15 considers the effects of these natural disasters, including Hurricane Katrina, on insurance companies.
  • The Federal Reserve's unusual action in the spring of 2008 of brokering the sale of Bear Stearns. Chapters 4 and 16 look at the sale of the then fifth largest investment bank in the U.S. to J.P. Morgan Chase and the Fed's lending directly to Wall Street investment banks for the first time ever.
  • The unprecedented drop of the U.S. dollar relative to many major foreign currencies. Chapter 9 looks at the fluctuation of 2007 and 2008 and discusses its consequences.
  • The growth of the financial services holding company as a corporate form. First allowed under the 1999 Financial Services Modernization Act, this practice is highlighted in several chapters. These entities can combine the various sectors of the financial institutions industry into one holding company that offers a whole variety of financial services.

RETAINED FEATURES:

• A strong markets focus within a modern risk management framework. The text recognizes that domestic and foreign financial markets are increasingly connected and that financial intermediaries are evolving towards a single financial services industry. The book looks at how new risks have evolved, how the more traditional risks have changed as a result, and how all of these risks can be measured and managed.
• Rich pedagogy to help students retain and apply chapter concepts. Key elements include chapter-opening outlines, chapter navigators, bold key terms and margin glossary, called out websites in the margin, “Did You Understand” boxes, in-chapter examples, “In the News” boxes, “Search the Site” exercises, and “Ethical Debates” boxes.
• Well-developed end of chapter problems. Each chapter includes at least twenty problems, which are written for varied levels of difficulty. Standard & Poor’s questions are also written for most chapters, and capitalize on the free access to the educational version of S&P’s Market Insight. These are denoted by an icon
• Exceptional illustration program. The rich figures, diagrams and graphs in this text provide accessibility. In the markets chapters, the details of getting a security to the market and the subsequent trading of securities are illustrated using figures, diagrams, etc. in a manner unique to this text. After reading a chapter, the student should be able to visualize exactly how a security is placed in a financial market and then how they can transact in the market.
• Chapter Navigators are featured at the beginning of each chapter and numbers are assigned to chapter topics. At the appropriate place in the chapter, a numbered navigator will reappear to draw the reader’s attention to the chapter topic. An effective way to roadmap the chapter and connect concepts
• Excel problems are featured at the end of selected chapters, denoted by an icon. Spreadsheet templates will be available on the book website.
• An international icon in the margin to easily communicates where international material is being introduced.