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ECO 320 Strayer University Wk 3 Core Principles of Money and Banking Questions

ECO 320 Strayer University Wk 3 Core Principles of Money and Banking Questions

I’m working on a finance multi-part question and need a sample draft to help me study.

Week 3 Assignment – Homework Activity

Banking Concepts 1

These concepts check your understanding of the core principles in money and banking, the role of money, the valuation of financial instruments, and the effect of inflation on interest rates. Briefly answer (in a list or short paragraph) the following questions:

  • Identify the core principles that could be used to explain why credit card issuers charge such high rates of interest. Refer to Chapter 1, section “The Five Core Principles of Money and Banking,” pages 4–8.
  • Explain why the following statement is true: “Money is an asset, but not all assets are money.” Refer to Chapter 2, section “Money and How We Use It,” pages 23–25.
  • Identify the four fundamental characteristics that determine the value of a financial instrument. Refer to Chapter 3, section “Primer for Valuing Financial Instruments,” pages 50–51.
  • If a borrower and a lender agree on a long-term loan at a nominal interest rate that is fixed over the duration of the loan, explain how a higher-than-expected rate of inflation will impact the parties, if at all. Refer to Chapter 6, section “Inflation Risk,” pages 151–152.


These concepts check your understanding of why large financial firms or universal banks were created, the motivation behind the 1988 Basel Accord, the criteria for a successful central bank, and the limits of the Federal Reserve in preventing a stock market crash. Briefly answer (in a list or short paragraph) the following questions:

  • Owners and managers have cited three reasons for the creation of large financial firms or universal banks. What are these reasons? Refer to Chapter 13, section “The Future of Banks,” pages 336–337.
  • What was the primary motivation behind the creation of the 1988 Basel Accord?
  • Today, there is a clear consensus about the best way to design a central bank. What are the criteria for a successful central bank?
  • Respond to the following statement with a brief explanation: “The Federal Reserve can improve the performance of the stock market, but it cannot prevent a stock market crash.”

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