Includes index.

Introduction -- Why study financial markets and institutions? -- Ove rview of the financial system -- Fundamentals of financial markets -- W hat do interest rates mean and what is their role in valuation? -- Why do interest rates change? -- How do risk and term structure affect inte rest rates? -- Are financial markets efficient? -- Fundamentals of fina ncial institutions -- Why do financial institutions exist? -- Why do fi nancial crises occur and why are they so damaging to the economy? -- Ce ntral banking and the conduct of monetary policy -- Central banks and t he federal reserve system -- Conduct of monetary policy: tools, goals, strategy, and tactics -- Financial markets -- The money markets -- The bond market -- The stock market -- The mortgage markets -- The foreign exchange market -- The international financial system -- The financial institutions industry -- Banking and the management of financial instit utions -- Financial regulation -- Banking industry: structure and compe tition -- The mutual fund industry -- Insurance companies and pension f unds -- Investment banks, security brokers and dealers, and venture cap ital firms -- The management of financial institutions -- Risk manageme nt in financial institutions -- Hedging wit.