CONTENTS
Preface = xiv
Acknowledgements = xvi
1 The Debt Merry-Go-Round = 1
RAISON D' E ^ TRE OF THE MARKETS = 1
Lenders = 1
Borrowers = 2
Securities = 3
RAISING CAPITAL = 4
Bank Loans = 4
Bonds = 4
Equity = 5
Gearing = 5
CONCLUSION = 7
SUMMARY = 8
2 Banking(Ⅰ) - Background = 9
HISTORY = 9
BANKING SUPERVISION = 12
TYPES OF BANK, DEFINITIONS = 13
OTHER BANKING TERMINOLOGY = 20
A BANK'S BALANCE SHEET = 21
THE CREATION OF CREDIT = 23
Banking Depends on Confidence = 24
The Money Supply = 24
Liquidity Ratios = 24
The Capital Ratio = 25
CAPITAL RATIO = 25
The Basic Concept = 25
The Basic Committee = 25
Increasing Capital Ratio = 27
CENTRAL BANK REPORTING = 28
THE SECOND BANKING DIRECTIVE = 28
MAJOR WORLD BANKS = 29
SUMMARY = 33
APPENDIX 1 - MAJOR BANKS ACROSS THE WORLD = 35
Main European Banks = 35
US and Japan = 37
APPENDIX 2 - INTERNATIONAL BANKING COOPERATION AND MERGERS = 38
3 Banking(Ⅱ) - The Role of the Central Bank = 40
HISTORY OF THE MAJOR CENTRAL BANKS = 40
France = 40
Germany = 40
Japan = 41
UK =41
US = 42
CENTRAL BANK ACTIVITIES = 43
Supervision of the Banking System = 43
Monetary Policy = 44
Banknotes = 45
Banker to the Other Banks = 45
Banker to the Government = 46
Raising Money for the Government = 47
Controlling the Nation's Currency Reserves = 49
Acting as Lender of Last Resort = 49
Liaison with International Bodies = 49
SUMMARY = 51
4 Banking(Ⅲ) - Commercial Banking = 52
INTRODUCTION = 52
RETAIL BANKING = 52
Types of Service = 52
Money Banking - Deposits = 53
Money Banking - Bank Lending = 55
Home Banking = 56
The Electronic Purse = 57
Other Services = 57
Clearing Systems = 59
Key Retail Banking Issues = 60
WHOLESALE BANKING = 65
BANK LENDING = 66
Uncommitted Facilities = 66
committed Facilities = 67
Syndicated Facilities = 70
The Loan Agreement = 75
SUMMARY= 77
5 Banking(Ⅳ) - Investment Banking = 78
INTRODUCTION = 78
INVESTMENT BANKING = 78
Accepting = 78
Corporate Finance = 82
Securities Trading = 85
Investment Management = 86
Loan Arrangement = 87
Foreign Exchange = 87
Miscellaneous Activities = 84
REGULATION = 88
SUMMARY = 89
6 The Money and Bond Markets = 91
THE RATE OF INTEREST = 91
Risk = 91
Maturity = 92
Expectations = 92
Liquidity = 93
supply and Demand = 93
Inflation = 94
YIELD = 94
Par Values = 94
interest Yield = 95
Gross Redemption Yield =96
Accrued Interest = 98
CREDIT RATINGS = 99
DOMESTIC MONEY MARKETS = 101
Call Money = 101
The Interbank Market = 102
Money Market Securities = 103
Treasury Bills = 103
Local Authority/Public Utility Bills = 104
Certificates of Deposit(CDs) = 105
Commercial Paper(CP) = 105
Bills of Exchange = 107
CENTRAL BANK ROLE = 107
UK Discount Houses = 109
DOMESTIC BOND MARKETS = 110
Introduction = 110
Government Bonds = 112
Local Authority/Public Sector Bonds = 115
Mortgage and Asset Backed Bonds = 115
Corporate Bonds = 116
Foreign Bonds = 118
Junk Bonds = 118
INTERNATIONAL MARKETS = 119
Background: Eurocurrencies = 119
The Syndicated Loan Market = 121
The International Debt Crisis = 122
The Eurobond Market = 124
Coupon Stripping = 128
Other Variations = 129
Medium-Tenn Notes(MTNs) = 130
The Money Markets = 131
Repos = 131
Statistics = 132
SUMMARY = 135
7 Foreign Exchange = 137
INTRODUCTION = 137
The Market = 137
Buyers and Sellers = 137
Bank Profits = 138
WHAT DETERMINES EXCHANGE RATES? = 140
BRETTON WOODS = 142
Exchange Rate Stability = 143
International Monetary Fund = 143
The World Bank = 144
FLOATING RATES = 145
THE EUROPEAN MONETARY SYSTEM(EMS) = 147
The Exchange Rate Mechanism = 147
The Ecu = 149
THE EUROPEAN MONETARY COOPERATION FUND = 151
EUROPEAN MONETARY UNION(EMU) = 15l
FOREIGN EXCHANGE RISK FOR CORPORATES = 155
Types of Risk = 155
Transaction Risk - Forward Rates = 156
Transaction Risk - Options = 158
FOREIGN EXCHANGE DEALING = 161
Quotations = 161
Cross-rates = 162
Foreign Exchange Swaps = 163
Brokers = 165
Settlement = 166
ARBITRAGE = 168
CENTRAL BANK SURVEYS = 168
WHY LONDON? = 170
SUMMARY = 171
APPENDIX = 173
8 Finance for Trade = 174
GENERAL PROBLEMS = 174
PAYMENT SERVICES = 174
COLLECTION OF DEBTS = 176
EXTENSION OF CREDIT = 177
Bill of Exchange = 177
Documentary Letter of Credit = 177
Types of Documentary Credit = 179
Documentary Collection = 182
FINANCE FOR THE EXPORTER = 182
FOREIGN EXCHANGE = 184
TRADING GUARANTEES = 184
MISCELLANEOUS SERVICES = 186
SUMMARY = 187
9 Stock Exchanges = 188
HISTORY OF ASSOCIATIONS FOR TRADING = 188
STOCKS AND SHARES = 189
INTERNATIONAL EQUITY = 191
INDICES = 192
WHO OWNS SHARES? = 195
Small Investors vs Institutions = 195
Pension Funds: Funding vs Unfunding = 195
Equity Investment = 199
Mutual Funds = 200
Active vs Passive Management = 202
East Europe = 202
DEALING SYSTEMS = 202
Order Driven Systems = 202
Quote Driven Systems = 204
Hybrid Systems = 208
Inter Dealer Brokers = 209
Stock Borrowing and Lending = 209
Bought Deals/Block Trades = 210
Share Buy-Backs = 21O
SETTLEMENT = 211
NEW ISSUES = 212
RIGHTS ISSUES = 213
SCRIP ISSUES AND SPLITS = 214
SCRIP DIVIDENDS = 216
SECOND MARKETS = 216
ANALYSTS' RATIOS = 217
DEREGULATION = 219
EU RULES = 222
Investment Services Directive = 222
Capital Adequacy Directive = 223
Mergers and Acquisitions = 223
Eurolist = 224
SUMMARY = 224
10 Traded Options = 226
DERIVATIVE PRODUCTS = 226
TRADED OPTIONS: EQUITIES = 227
Calls and Puts = 227
Option Writers = 229
Trading Options = 229
Intrinsic Value and Time Value = 231
Calculation of the Premium = 232
Exercise or Trade? = 234
Other Terminology = 235
Options on Indices = 236
TRADED OPTION: OTHER OPTIONS = 238
Currencies = 238
Bonds = 238
Interest Rates = 239
OPTION STRATEGIES = 241
SUMMARY = 243
11 Financial Futures = 244
FUTURES TRADING = 244
Background = 244
Hedgers vs Speculators = 244
Commodity Futures = 246
Financial Futures = 248
Index Futures = 250
Bond Futures = 252
Interest Rates = 253
Currency Futures = 255
Some Problems of Futures Exchanges = 255
Open Outcry or Computers? = 255
Contract Volumes = 257
SUMMARY = 257
12 Other Derivative Products = 259
INTRODUCTION = 259
FORWARD RATE AGREEMENTS(FRAS) = 259
SWAPS = 262
Comparative Advantage = 262
Interest Rate Swaps = 264
Making a Market in Swaps = 264
Users of Swaps = 266
Swaps and Futures = 268
Other Swaps = 269
CURRENCY SWAPS = 269
CAPS, FLOORS AND COLLARS = 270
Introduction = 270
Caps = 271
Floors = 271
Collars = 272
THE MARKET IN DERIVATIVE INSTRUMENTS = 273
SUMMARY = 275
13 Insurance = 277
BACKGROUND TO THE INSURANCE MARKETS = 277
History = 277
The Insurance Market = 278
Assurance/Insurance = 278
Regulation = 279
Distribution = 280
Telephone Selling = 281
Self-insurance = 281
REINSURANCE = 282
Definitions = 282
Proporional and Non-proportional Reinsurance = 282
Financial Reinsurance = 283
The Reinsurance Market = 284
LLOYD'S = 284
Organisation = 284
The London Market = 286
Early Problems = 297
Commercial Problems = 288
THE MARKET TODAY = 291
EU REGULATION = 292
SUMMARY = 293
14 Key Trends = 295
INTRODUCTION = 295
DEREGULATION = 295
REREGULATION = 296
RISK MANAGEMENT - COUNTERPARTY RISK = 297
RISK MANAGEMENT - DERIVATIVES = 299
MERGERS/COOPERATION = 300
BANCASSURANCE/ALLFINANZ = 300
DEMOGRAPHIC FACTORS = 301
THE EU = 301
ASIAN EMERGING MARKETS = 301
SUMMARY = 302
Glossary = 303
Index =320
