Textbook in PDF format

The purpose of Financial Market Rates and Flows is to provide the reader with a basic conceptual understanding of the function of financial markets, of the flow of funds, of market efficiency or the lack thereof, of levels of interest rates, and of interest-rate differentials. The latter are due to differences in maturity, default risk, coupon rate, call feature, and taxability; and the effect of each is examined in detail. Another factor, the social allocation of capital, affects both interest rates and financial flows; the effect here is examined in the last chapter. A second purpose of the book is to evaluate a rich body of empirical evidence as it bears on the various theories that are considered. The focus, then, is not only on the theoretical foundations for interest rates and interest-rate differentials, but on the “real world” conditions that affect these rates and differentials. As the book unfolds, a conceptual framework is developed for analyzing interest rates under conditions of uncertainty. This book can be used as a supplement for courses in money and capital markets, money and banking, monetary policy, investments, and financial institutions. In addition, it is useful to those in the financial community, in business, and in government who are concerned with investing in or issuing fixed-income securities and with the flow of funds through financial markets