Econ 4.3

Friday, January 22, 1999
Announcements: Select the seat you wish to be assigned to for the rest rest of the semester, tomorrow, when you come to class. Record this seat and row number as you need to put this on all future homework problem set assignments. The first homework assignment was handed in. A seating chart was created. There will be mandatory attendance for all classes and you need to be on time to be marked in. If you were not in class, please see the teacher and get your name on the seating chart. Professor Fox was not there.

TA: Heather Zackal
Office: 218 Sparks
Hours: TR 2-3:30 pm
Email: HeatherZackal@psu.edu

The first test will be one week from Monday.

Lecture notes:  

Wall Street Journal Video

• Market: a place to buy and sell commodities
• NYSE: the largest organized security market in US -- about 1,700 companies
• Dow Jones: the most widely quoted market index
• Initial Public Offering (IPO): the first time a company sells stock
• Over-the-Counter Market: NASDAQ; hi-tech companies and young companies trade over the counter

• The aim of sellers and buyers is to get the best possible price

• Bond: a type of financial instrument that firms issue in exchange for cash; good and safe
  • Junk bonds: Speculative; young companies or companies with too much debt
  • US Bonds
• Munis: Municipal bonds
• Federal Reserve: America's central bank; they make sure that there is enough money to keep economy going, but not enough to cause inflation; control interest rates; stores gold
• Federal Funds Rate: the FED controls directly and it affects the Prime Rate
  • The government issues Treasury Bills, Notes and Bonds
• Foreign Exchange: Largest market in the world, trades $650 billion
• Commodities: offsets market risks; Futures; an open-outcry trading market
  • Hedgers: long term approach
  • Speculators: short term approach