Includes glossary and index.

Contents: Part one: Introduction: Why study financial markets and institutions? -- Overview of the financial system -- Part two: Fundamentals of financial markets: What do interest rates mean and what is their role in valuation? -- Why do interest rates change? -- How do risk and term structure affect interest rates? -- Are financial markets efficient? -- Part three: Fundamentals of financial institutions: Why do financial institutions exist? -- Why do financial crises occur and why are they so damaging to the economy? -- Part four: Central banking and the conduct of monetary policy: Central banks and the federal reserve system -- Conduct of monetary policy: tools, goals, strategy, and tactics -- Part five: Financial markets: The money markets -- The bond market -- The stock market -- The mortgage markets -- The foreign exchange markets -- The international financial system -- Part six: The financial institutions industry: Banking and the management of financial institutions -- Financial regulation -- Banking industry: structure and competition -- The mutual fund industry -- Insurance companies and pension funds -- Investment banks, security brokers and dealers, venture capital firms -- Part seven: The management of financial institutions: Risk management in financial institutions -- Hedging with financial derivatives.