FIN310 Class Web Page, Fall ' 24
Instructor: Maggie Foley
Jacksonville University
The
Syllabus      Risk
Tolerance Assessment  
·      
Term
Project 1 (option 1)    
·      
Term
Project 2  (option 2)  
·      
Term Project 3 (option 3): Create a Stock Data Fetcher Using Google Sheets
(Details can be found at the bottom of the website)
Weekly SCHEDULE, LINKS, FILES and Questions
| Chapter | Coverage,
  HW, Supplements -      
  Required | References 
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| Intro | 
 Discussion: How to pick stocks (finviz.com) How To Win The MarketWatch Stock Market GameDaily earning announcement: http://www.zacks.com/earnings/earnings-calendar IPO schedule: http://www.marketwatch.com/tools/ipo-calendar   | 
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| Review of the Financial Market 
 U.S. Regional Banks
  Crisis in 2023    
  Video on youtube  (fyi)1.    
  Background: 
 2.    
  The Trigger: 
 3.    
  Contagion Effect: 
 4.    
  Government and
  Regulatory Response: 
 5.    
  Lessons Learned: 
 Key
  Takeaways
 The U.S. economy in
  August 2024·  Economic Growth: 
 ·  Inflation and Monetary Policy: 
 ·  Financial Markets: 
 ·  Fiscal Policy: 
 ·  Election Uncertainty: 
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| Part I –
  The Feds: Steering Monetary Policy      Quiz2       Fed Introduction Video by Invideo.ai (FYI) 1.
  The Federal Reserve System: Structure and Roles·       
  The Federal Reserve
  System: 
 ·       
  Board of Governors: 
 ·       
  12 Regional Federal
  Reserve Banks: 
 ·       
  Regional Bank Presidents: 
 2.
  The Federal Open Market Committee (FOMC): Decision-Making Body·       
  Composition of the FOMC: 
 ·       
  Functions and
  Responsibilities: 
 3.
  The Interest Rate Decision-Making Process·       
  Data Analysis: 
 ·       
  Discussion and Debate: 
 ·       
  Voting: 
 ·       
  Public Communication: 
 4.
  Key Concepts and Tools in Monetary Policy
  (Continued)·       
  Federal Funds Rate
  (Continued): 
 ·       
  Open Market Operations: 
 ·       
  Discount Rate: 
 ·       
  Reserve Requirements: 
 ·       
  Quantitative Easing (QE): 
 ·       
  Dual Mandate: 
 5.
  Critical Thinking Points·       
  Who Makes the Decisions?: ·       
  FOMC Members:
  Understand the distinct roles of the Board of Governors and the regional
  Federal Reserve Bank Presidents in the decision-making process. Recognize the
  influence of each member, especially the Fed Chair, and how their
  backgrounds, economic philosophies, and regional concerns shape their
  decisions. ·       
  Rotation System:
  Consider how the rotation of voting rights among regional bank presidents
  ensures a broad range of perspectives are considered in monetary policy. ·       
  How Is Policy Decided?: ·       
  Data-Driven Decisions:
  Reflect on the importance of data in shaping monetary policy. Explore how
  different economic indicators, like unemployment, inflation, and GDP growth,
  influence the FOMC’s decisions. ·       
  Diverse Opinions:
  Examine how the diversity of opinions within the FOMC can lead to complex
  policy debates. Consider the impact of dissenting votes and what they reveal
  about the challenges of setting a single monetary policy in a diverse and
  dynamic economy. ·       
  Communication Strategy:
  Analyze the importance of clear communication from the Fed, especially in
  managing market expectations and maintaining public confidence in the
  economy. ·       
  What Tools Does the Fed
  Use?: ·       
  Impact of Interest Rates:
  Delve into how changes in the federal funds rate ripple through the economy,
  affecting everything from mortgage rates to business investment decisions.
  Explore the effectiveness and limitations of this tool in different economic
  conditions. ·       
  Role of Open Market
  Operations: Study how the Fed uses OMOs to manage
  the money supply and control short-term interest rates. Understand the
  strategic use of buying and selling securities and how these actions
  influence the broader economy. ·       
  Use of Non-Traditional
  Tools: Investigate the circumstances under
  which the Fed might use tools like QE. Consider the potential risks and
  benefits of such interventions and how they differ from traditional monetary
  policy actions. ·       
  Why Does the Fed Matter?: 
 6.  12 Regional Federal
  Reserve Bank PresidentsNomination Process:1. Selection by the Regional Board of Directors: The president of each of the 12 regional Federal Reserve Banks is selected by the bank's board of directors. The board of directors consists of nine members, divided into three classes: · Class A: Three members representing member banks. · Class B: Three members representing the public, elected by member banks. · Class C: Three members representing the public, appointed by the Board of Governors. The Class B and Class C directors play a primary role in the selection process, with the final candidate needing to be approved by the Board of Governors in Washington, D.C. 2. Approval by the Board of Governors: Once the regional board of directors selects a candidate, the appointment must be approved by the Board of Governors of the Federal Reserve System. Term Duration:
 7.  Federal Reserve Chair
  and Vice ChairNomination Process:· Nomination by the President: The Chair and Vice Chair of the Federal Reserve Board are nominated by the President of the United States from among the sitting members of the Board of Governors. · Confirmation by the Senate: The nominations must be confirmed by the U.S. Senate through a majority vote. Term Duration:
 8.    
  Board of GovernorNomination
  Process:
 Term
  Duration:
 Summary
 9. Chair The Fed Simulation Game Game
  1: https://lewis500.github.io/macro/ Game
  2: https://www.fedchairsim.com/ Homework 1-1: Understanding
  the Role of the Fed Chair (due with the first midterm exam) Objective: Play the FOMC Simulation Game and analyze the challenges faced by the Federal Reserve Chair. Provide thoughtful advice based on your experience with the simulation and understanding of monetary policy. Instructions: 1.    
  Play the Simulation: 2.    
  Reflection Questions: o   Challenges
  as Fed Chair: 
 o   Advice
  to Fed Chair Jerome Powell: 
 | In Plain Enlgish Fed St. Louise
   (Cool video about Fed)
      ***** FRB – Federal Reserve Banks ******* Federal Reserve Bank
  of Atlanta Federal Reserve Bank of Atlanta's Boardroom Video
  (youtube)
  https://www.atlantafed.org/about/atlantafed/directors
      The
  Fed Explains Monetary Policy (video) The
  Tools of Monetary Policy (video)  Segment
  406: Open Market Operations(video of Philadelphia Fed)      ********** Fed Funds Rate *********
 Release
  date: July 1, 2024  https://fred.stlouisfed.org/series/FEDFUNDS    What
  is the Fed Fund rate (youtube)   Segment 406: Open Market Operations (youtube, by the Fed) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Part II –  The Mechanics of
  Monetary Policy: Tools and Outcomes  Quiz1   Quiz3 Introduction to Monetary PolicyMonetary
  policy involves the actions undertaken by a central bank, such as the Federal
  Reserve in the United States, to influence the availability and cost of money
  and credit to help promote national economic goals. It revolves around
  managing the economy's money supply and interest rates to control inflation,
  stabilize currency, and achieve a sustainable level of economic growth and
  employment. Key Tools of Monetary Policy1.    
  Open Market Operations
  (OMOs): 
 2.    
  The Discount Rate: 
 3.    
  Reserve Requirements: 
 Goals of Monetary Policy
 Outcomes of Monetary Policy
 Challenges in Monetary Policy
 
 Homework 1-2: Monetary Policy (due
  with the first midterm exam) 1.       Explore the interactive simulation at https://www.jufinance.com/fin310_24f/money_interest.html
  to understand the relationship between money supply and interest rates. Question: Based on current economic indicators, do you support the
  Federal Reserve's decision to lower interest rates in September 2024? Provide
  reasons for your stance.   2.      Velocity of Money
  Simulation Engage with
  the simulation game at https://www.jufinance.com/fin310_24f/chair_fed.html
  to learn about the dynamics between money supply, interest rates, and the
  velocity of money. Question: What is the concept of the velocity of money? How can
  changes in interest rates influence this monetary indicator? What is the
  current velocity of money according to the latest data? In your opinion, is
  this velocity too high, too low, or optimal for the current economic
  environment? | Nominal Interest Rates and the Market for Money Beggs, Jodi. "How Money Supply and Demand Determine Nominal Interest Rates." ThoughtCo, Apr. 5, 2023, thoughtco.com/nominal-interest-rates-and-money-supply-and-demand-1147766. 
 There is more than one
  interest rate in an economy and even more than one interest rate on
  government-issued securities. These interest rates tend to move in tandem, so
  it is possible to analyze what happens to interest rates overall by looking
  at one representative interest rate. What Is the Price of Money? Like other supply and demand
  diagrams, the supply and demand for money is plotted with the price
  of money on the vertical axis and the quantity of money in the economy on the
  horizontal axis. But what is the "price" of money?  As it turns out, the price
  of money is the opportunity cost of holding money. Since cash doesn't earn
  interest, people give up the interest that they would have earned on non-cash
  savings when they choose to keep their wealth in cash instead. Therefore,
  the opportunity cost of money, and, as a
  result, the price of money, is the nominal interest rate. Graphing the
  Supply of Money 
 Therefore, the supply of
  money is represented by a vertical line at the quantity of money that the Fed
  decides to put out into the public realm. When the Fed increases the money
  supply this line shifts to the right. Similarly, when the Fed decreases the
  money supply, this line shifts to the left. As a reminder, the Fed
  generally controls the supply of money by open-market operations where it
  buys and sells government bonds. When it buys bonds, the economy gets the
  cash that the Fed used for the purchase, and the money supply increases. When
  it sells bonds, it takes in money as payment, and the money supply decreases.
  Even quantitative easing is just a variant
  on this process. Graphing the Demand for Money 
 Most importantly,
  households, businesses and so on use the money to purchase goods and
  services. Therefore, the higher the dollar value of aggregate output, meaning
  the nominal GDP, the more money the players in the
  economy want to hold to spend it on this output. However, there's an
  opportunity cost of holding money since money doesn't earn interest. As the
  interest rate increases, this opportunity cost increases, and the quantity of
  money demanded decreases as a result. To visualize this process, imagine a
  world with a 1,000 percent interest rate where people make transfers to their
  checking accounts or go to the ATM every day rather than hold any more cash
  than they need to. Since the demand for money
  is graphed as the relationship between the interest rate and quantity of
  money demanded, the negative relationship between the opportunity cost of
  money and the quantity of money that people and businesses want to hold
  explains why the demand for money slopes downward. Just like with other demand curves, the demand for money shows
  the relationship between the nominal interest rate and the quantity of money
  with all other factors held constant, or ceteris paribus. Therefore, changes
  to other factors that affect the demand for money shift the entire demand
  curve. Since the demand for money changes when nominal GDP changes, the
  demand curve for money shifts when prices (P) or real GDP (Y) changes. When
  nominal GDP decreases, the demand for money shifts to the left, and, when
  nominal GDP increases, the demand for money shifts to the right. Equilibrium in the Money Market 
 Equilibrium in a market is
  found where the quantity supplied equals the quantity demanded because
  surpluses (situations where supply exceeds demand) pushes prices down and
  shortages (situations where demand exceeds supply) drive prices up. So, the
  stable price is the one where there is neither a shortage nor a surplus. Regarding the money market,
  the interest rate must adjust such that people are willing to hold all of the
  money that the Federal Reserve is trying to put out into the economy and
  people aren't clamoring to hold more money than is available.  Changes in the Supply of Money 
 When the Fed decreases the
  money supply, there is a shortage of money at the prevailing interest rate. Therefore,
  the interest rate must increase to dissuade some people from holding money.
  This is shown on the right-hand side of the diagram above. This is what happens when
  the media says that the Federal Reserve raises or lowers interest rates—the
  Fed isn't directly mandating what interest rates are going to be but is
  instead adjusting the money supply to move the resulting equilibrium interest
  rate. Changes in the Demand for Money 
 The right-hand panel of the
  diagram shows the effect of a decrease in demand for money. When not as much
  money is needed to purchase goods and services, a surplus of money
  results and interest rates must decrease to make players in the economy
  willing to hold the money. Using Changes in the Money Supply to Stabilize
  the Economy 
 On the other hand, if the
  supply of money increases in tandem with the demand for money, the Fed can
  help to stabilize nominal interest rates and related quantities (including
  inflation). That said, increasing the
  money supply in response to a demand increase that is caused by an increase
  in prices rather than an increase in output is not advisable, since that
  would likely exacerbate the problem of inflation rather than have a
  stabilizing effect. Key Takeaways:  1.
  Concept of Nominal Interest Rates: 
 2.
  The Price of Money: 
 3.
  Supply and Demand Representation: 
 4.
  Market Equilibrium: 
 5.
  Impact of Federal Reserve Actions: 
 6.
  Influence of Demand Changes: 
 7.
  Stabilizing the Economy Through Monetary Policy: 
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| Chapter 2 What is Money Part I What is Money?   
  Let’s start by Playing a game  https://www.jufinance.com/game/money_supply.html ·         There is no single "correct" measure of
  the money supply: instead, there are several measures, classified along a
  spectrum or continuum between narrow and broad monetary
  aggregates. •         Narrow measures include only the most liquid
  assets, the ones most easily used to spend (currency, checkable deposits).
  Broader measures add less liquid types of assets (certificates of deposit, etc.)   
 ·         M0: In
  some countries, such as the United Kingdom, M0 includes bank reserves, so M0
  is referred to as the monetary base, or narrow money. ·         MB: is
  referred to as the monetary base or total currency.  This
  is the base from which other forms of money (like checking deposits, listed
  below) are created and is traditionally the most liquid measure of the money
  supply. ·         M1: Bank
  reserves are not included in M1. (M1 and
  Components @ Fed St. Louise website)·         M2:
  Represents M1 and "close substitutes" for M1. M2 is a broader
  classification of money than M1. M2 is a key economic indicator used to
  forecast inflation. (M2 and components @
  Fed St. Louise website) ·         M3: M2
  plus large and long-term deposits. Since 2006, M3 is no longer published by
  the US central bank. However, there are still estimates produced by
  various private institutions. (M3 and components at
  Fed St. Louise website) Let’s watch this money
  supply video: 
 
 https://tradingeconomics.com/united-states/money-supply-m0 
 https://tradingeconomics.com/united-states/money-supply-m1 
 https://tradingeconomics.com/united-states/money-supply-m2    Key Takeaway:  VIDO (FYI) by
  invideo.ai 
 ·       
  Definition: M0 represents the most
  basic form of money, including physical currency (coins and paper money) in circulation
  and reserves held by banks at the central bank. It is the foundation of the
  money supply and the most liquid form of money. ·       
  Role: M0 is crucial because it
  forms the base upon which the broader money supply (M1 and M2) is built. It
  reflects the amount of cash and bank reserves that can be quickly used by
  banks to meet withdrawal demands or create more money through lending. 
 
 
 
 
 
 
 ·      
  Stimulating
  Economic Activity:
  The growth in M1 and M2 during the pandemic helped stimulate economic activity
  by making more funds available for spending and investment, which was crucial
  for economic recovery. ·      
  Inflationary
  Pressure:
  The significant increase in the money supply has also raised concerns about
  inflation, as more money in circulation can lead to rising prices if it
  outpaces economic growth. ·      
  Central
  Bank Policy:
  The Federal Reserve closely monitors these trends and adjusts policies, such
  as interest rates, to balance economic growth with inflation control,
  ensuring that the expansion of M1 and M2 does not lead to excessive
  inflation. Homework (due with the first midterm
  exam)Imagine you're the Chair of the Federal Reserve during the
  COVID-19 pandemic. You have to make decisions that will affect M0, M1, and
  M2. 
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| Part II What is Fractional
  Reserve Banking System? The Money
  Multiplier (video)Money creation in a fractional reserve system | Financial
  sector | AP Macroeconomics | Khan Academy
 Fractional Reserve Banking By JULIA KAGAN Updated August 10, 2022, Reviewed by SOMER
  ANDERSON What Is Fractional Reserve Banking? Fractional reserve
  banking is a system in which only a
  fraction of bank deposits are backed by actual cash on hand and available for
  withdrawal. This is done to theoretically expand the economy by freeing
  capital for lending. Today, most economies' financial systems use
  fractional reserve banking. KEY TAKEAWAYS ·      
  Fractional reserve
  banking describes a system whereby banks can loan out a certain amount of the
  deposits that they have on their balance sheets. ·      
  Banks are required
  to keep on hand a certain amount of the cash that depositors give them, but
  banks are not required to keep the entire amount on hand. ·      
  Often, banks are
  required to keep some portion of deposits on hand, which is known as the
  bank's reserves. ·      
  Some banks are exempt
  from holding reserves, but all banks are paid a rate of interest on reserves. Understanding
  Fractional Reserve Banking Banks are required to
  keep on hand and available for withdrawal a certain amount of the cash that
  depositors give them. If someone deposits $100, the bank can't lend out the
  entire amount. Nor are banks required to keep the entire amount on hand. Many central banks have historically
  required banks under their purview to keep 10% of the deposit, referred to as
  reserves. This requirement is set in the U.S. by the Federal Reserve and is
  one of the central bank's tools to implement monetary policy. Increasing the
  reserve requirement takes money out of the economy while decreasing the
  reserve requirement puts money into the economy. Historically, the
  required reserve ratio on non-transaction accounts (such as CDs) is zero,
  while the requirement on transaction deposits (e.g., checking accounts) is 10
  percent. Following recent efforts to stimulate economic growth, however, the
  Fed has reduced the reserve requirements to zero for transaction accounts as
  well. Fractional Reserve
  Requirements Depository
  institutions must report their transaction accounts, time and savings
  deposits, vault cash, and other reservable obligations to the Fed either
  weekly or quarterly. Some banks are exempt from holding reserves, but all banks are paid a rate of interest on
  reserves called the "interest rate on reserves" (IOR) or the
  "interest rate on excess reserves" (IOER). This rate acts as an
  incentive for banks to keep excess reserves. Reserve requirements
  for banks under the Federal Reserve Act were set at 13%, 10%, and 7%
  (depending on what kind of bank) in 1917. In the 1950s and '60s, the Fed had
  set the reserve ratio as high as 17.5% for certain banks, and it remained
  between 8% to 10% throughout much of the 1970s through the 2010s. During this period,
  banks with less than $16.3 million in assets were not required to hold
  reserves. Banks with assets of less than $124.2 million but more than $16.3
  million had to have 3% reserves, and those banks with more than $124.2
  million in assets had a 10% reserve requirement. Beginning March 26, 2020, the 10% and 3% required reserve ratios
  against net transaction deposits was reduced to 0 percent for all banks, essentially
  removing the reserve requirements altogether. Prior to the
  introduction of the Fed in the early 20th century, the National Bank Act of
  1863 imposed 25% reserve requirements for U.S. banks under its charge. Fractional Reserve Multiplier Effect "Fractional reserve" refers to the
  fraction of deposits held in reserves. For example, if a bank has $500
  million in assets, it must hold $50 million, or 10%, in reserve. Analysts reference an
  equation referred to as the multiplier equation when estimating the impact of
  the reserve requirement on the economy as a whole. The equation provides an estimate for the amount of money created
  with the fractional reserve system and is calculated by multiplying the
  initial deposit by one divided by the reserve requirement. Using the
  example above, the calculation is $500 million multiplied by one divided by
  10%, or $5 billion. This is not how money is actually created but only a way to
  represent the possible impact of the fractional reserve system on the money
  supply. As such, while is useful for economics professors, it is generally
  regarded as an oversimplification by policymakers. What Are the Pros of Fractional Reserve Banking? Fractional reserve banking permits banks to use funds (i.e., the
  bulk of deposits) that would be otherwise unused and idle to generate returns
  in the form of interest rates on new loans—and to make more money available
  to grow the economy. It is thus able to better allocate capital to where it
  is most needed. What Are the Cons of Fractional Reserve Banking? Fractional reserve banking could catch a bank short of funds
  on hand in the self-perpetuating panic of a bank run. This occurs when
  too many depositors demand their cash at the same time, but the bank only
  has, say 10% of deposits in liquid cash available. Many U.S. banks were
  forced to shut down during the Great Depression because too many customers
  attempted to withdraw assets at the same time. Nevertheless, fractional
  reserve banking is an accepted business practice that is in use at banks
  worldwide. Where Did Fractional
  Reserve Banking Originate? Nobody knows for sure
  when fractional reserve banking originated, but it is certainly not a modern
  innovation. Goldsmiths during the Middle Ages were thought to issue demand
  receipts for gold on hand that exceeded the amount of physical gold they had
  under custody, knowing that on any given day only a small fraction of that
  gold would be demanded. In 1668, Sweden's
  Riksbank introduced the first instance of modern fractional reserve banking. Example:
  You deposited $1,000 in a local bank 
   
   Homework of chapter 2 (due with the first mid term) 1.    
  Imagine that you
  deposited $5,000 in Bank A. Reserve ratio is 0.1.  Imagine that the fractional banking system
  is fully functioning. After Eight cycles, what is the
  amount that has been deposited and what is the total amount that has been
  lent out? | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chapter 11 - 14:
  Commercial Banking and Investment Banking PPT2 Commercial banking II (Balance
  sheet)   Part I – Commercial
  Bank’s Financial Statement Analysis    Quiz Let’s Play a
  game on Banks’ Balance Sheet 
   Wells Fargo’s Balance Sheet   https://www.nasdaq.com/market-activity/stocks/wfc/financials 
 
 Wells Fargo’s Income Statement  https://www.nasdaq.com/market-activity/stocks/wfc/financials     
 
 
 Understanding
  How Banks Operate: A Case Study on Wells Fargo (based on a prior study)  Quiz1. Introduction to Banking OperationsBanks
  are essential financial institutions that play a vital role in the economy.
  They manage money, facilitate transactions, provide credit, and offer various
  financial services to individuals, businesses, and governments. We'll use
  Wells Fargo's financial data as a case study to illustrate these concepts. 2. Core Functions of a BankDeposits
  and Loans: 
 Interest
  Income and Net Interest Margin (NIM): 
 Investments: 
 Fee-Based
  Services: 
 3. Understanding Key Financial StatementsBalance
  Sheet: 
 Income
  Statement: 
 4. Wells Fargo Case Study: Key Financial
  Metrics (2020-2023)Using
  Wells Fargo's financial data, let's explore key metrics that indicate the
  bank's financial health: Total
  Revenue: 
 Cost
  of Revenue: 
 Net
  Income: 
 Operating
  Income (EBIT): 
 Total
  Assets and Liabilities: 
 5. Identifying Bank VulnerabilitiesDeclining
  Net Interest Margin (NIM): 
 High
  Loan Defaults: 
 Increasing
  Cost of Revenue: 
 High
  Leverage: 
 Declining
  Liquidity: 
 6. Safety Tips for Managing and Analyzing
  BanksDiversify
  Assets: 
 Maintain
  Adequate Reserves: 
 Monitor
  Loan Quality: 
 Ensure
  Liquidity: 
 Stress
  Testing and Scenario Analysis: 
 Regulatory
  Compliance: 
 7. Practical Application: Analyzing Wells
  FargoHere’s how we can apply these concepts using Wells Fargo’s data: 
 
 8. Conclusion on Wells FargoWells
  Fargo’s financial performance from 2020 to 2023 demonstrates
  a bank that has effectively managed its operations despite various economic
  challenges. The consistent growth in revenue and net income, coupled with
  stable asset management, reflects the bank’s strong
  financial position. However, the significant rise in the cost of revenue in
  2023 could be a potential risk factor that needs to be monitored closely.     | Part III: Governmental Regulations on
  Banking Industry (FYI) A Brief History of U.S. Banking
  Regulation (FYI) By MATTHEW
  JOHNSTON Reviewed by
  MICHAEL J BOYLE on July 30, 2021 https://www.investopedia.com/articles/investing/011916/brief-history-us-banking-regulation.asp As early as
  1781, Alexander Hamilton recognized that “Most commercial nations have found
  it necessary to institute banks, and they have proved to be the happiest
  engines that ever were invented for advancing trade.” Since then, America has
  developed into the largest economy in the world, with some of the biggest
  financial markets in the world. But the path from then to now has been
  influenced by a variety of different factors and an ever-changing regulatory
  framework. The changing nature of that framework is best characterized by the
  swinging of a pendulum, oscillating between the two opposing poles of greater
  and lesser regulation. Forces, such as the desire for greater financial
  stability, more economic freedom, or fear of the concentration of too much
  power in too few hands, are what keep the pendulum swinging back and forth. Early Attempts
  at Regulation in Antebellum America From the
  establishment of the First Bank of the United States in 1791 to the National
  Banking Act of 1863, banking regulation in America was an experimental mix of
  federal and state legislation.1 2 The regulation was motivated, on the
  one hand, by the need for increased centralized control to maintain stability
  in finance and, by extension, the overall economy. While on the other hand,
  it was motivated by the fear of too much control being concentrated in too
  few hands.  Despite
  bringing a relative degree of financial and economic stability, the First
  Bank of the United States was opposed to being unconstitutional, with many
  fearing that it relegated undue powers to the federal government.
  Consequently, its charter was not renewed in 1811. With the government
  turning to state banks to finance the War of 1812 and the significant
  over-expansion of credit that followed, it became increasingly apparent that
  financial order needed to be reinstated. In 1816, the Second Bank of the
  United States would receive a charter, but it too would later succumb to
  political fears over the amount of control it gave the federal government and
  was dissolved in 1836. Not only at
  the federal level, but also at the level of state banking, obtaining an
  official legislative charter was highly political. Far from being granted on
  the basis of proven competence in financial matters, successful acquisition
  of a charter depended more on political affiliations, and bribing the
  legislature was commonplace. By the time of the dissolution of the Second
  Bank, there was a growing sense of a need to escape the politically corrupt
  nature of legislative chartering. A new era of “free banking” emerged with a
  number of states passing laws in 1837 that abolished the requirement to
  obtain an officially legislated charter to operate a bank. By 1860, a majority
  of states had issued such laws. In this
  environment of free banking, anyone could operate a bank on the condition,
  among others, that all notes issued were back by proper security. While this
  condition served to reinforce the credibility of note issuance, it did not
  guarantee immediate redemption in specie (gold or silver), which would serve
  to be a crucial point. The era of free banking suffered from financial
  instability with several banking crises occurring, and it made for a
  disorderly currency characterized by thousands of different banknotes
  circulating at varying discount rates. It is this instability and disorder
  that would renew the call for more regulation and central oversight in the
  1860s. Increasing
  Regulation from the Civil War to the New Deal The free
  banking era, characterized as it was by a complete lack of federal control
  and regulation, would come to an end with the National Banking Act of 1863
  (and its later revisions in 1864 and 1865), which aimed to replace the old
  state banks with nationally chartered ones. The Office of the Comptroller of
  the Currency (OCC) was created to issue these new bank charters as well as
  oversee that national banks maintained the requirement to back all note
  issuance with holdings of U.S. government securities. While the new
  national banking system helped return the country to a more uniform and
  secure currency that it had not experienced since the years of the First and
  Second Banks, it was ultimately at the expense of an elastic currency that
  could expand and contract according to commercial and industrial needs. The
  growing complexity of the U.S. economy highlighted the inadequacy of an
  inelastic currency, which led to frequent financial panics occurring
  throughout the rest of the nineteenth century. With the
  occurrence of the bank panic of 1907, it had become apparent that America’s
  banking system was out of date. Further, a committee gathered in 1912 to
  examine the control of the nation’s banking and financial system. It found
  that the money and credit of the nation were becoming increasingly
  concentrated in the hands of relatively few men. Consequently, under the
  presidency of Woodrow Wilson, the Federal Reserve Act of 1913 was approved to
  wrest control of the nation’s finances from banks while at the same time
  creating a mechanism that would enable a more elastic currency and greater
  supervision over the nation’s banking infrastructure. Although the
  newly established Federal Reserve helped to improve the nation’s payments
  system and created a more flexible currency, it's a misunderstanding of the
  financial crisis following the 1929 stock market crash served to roil the
  nation in a severe economic crisis that would come to be known as the Great
  Depression. The Depression would lead to even more banking regulation
  instituted by President Franklin D. Roosevelt as part of the provisions under
  the New Deal. The Glass-Steagall Act of 1933 created the Federal Deposit
  Insurance Corporation (FDIC), which implemented regulation of deposit
  interest rates, and separated commercial from investment banking. The Banking
  Act of 1935 served to strengthen and give the Federal Reserve more
  centralized power. 1980s
  Deregulation and Post-Crisis Re-Regulation The period
  following the New Deal banking reforms up until around 1980 experienced a
  relative degree of banking stability and economic expansion. Still, it has
  been recognized that the regulation has also served to make American banks
  far less innovative and competitive than they had previously been. The
  heavily regulated commercial banks had been losing increasing market share to
  less-regulated and innovative financial institutions. For this reason, a wave
  of deregulation occurred throughout the last two decades of the twentieth
  century. In 1980,
  Congress passed the Depository Institutions Deregulation and Monetary Control
  Act, which served to deregulate financial institutions that accept deposits
  while strengthening the Federal Reserve’s control over monetary policy.6 Restrictions on the opening of bank
  branches in different states that had been in place since the McFadden Act of
  1927 were removed under the Riegle-Neal Interstate Banking and Branching
  Efficiency Act of 1994. Finally, the Gramm-Leach-Bliley Act of 1999 repealed
  significant aspects of the Glass-Steagall Act as well as the Bank Holding Act
  of 1956, both of which had served to sever investment banking and insurance
  services from commercial banking.7 From 1999
  onwards, a bank could now offer commercial banking, securities, and insurance
  services under one roof.  All of this
  deregulation helped to accelerate a trend towards increasing the complexity
  of banking organizations as they moved to greater consolidation and
  conglomeration. Financial institution mergers increased with the total number
  of banking organizations consolidating to under 8000 in 2008 from a previous
  peak of nearly 15,000 in the early 1980s.8 While banks
  have gotten bigger, the conglomeration of different financial services under
  one organization has also served to increase the complexity of those
  services. Banks began offering new financial products like derivatives and
  began packaging traditional financial assets like mortgages together through
  a process of securitization. At the same
  time that these new financial innovations were being praised for their
  ability to diversify risk, the sub-prime mortgage crisis of 2007 that
  transformed into a global financial crisis and the need for the bailout of
  U.S. banks that had become “too big to fail” has caused the government to
  rethink the financial regulatory framework. In response to the crisis, the
  Obama administration passed the Dodd-Frank Wall Street Reform and Consumer
  Protection Act in 2010, aimed at many of the apparent weaknesses within the
  U.S. financial system.9 It may take
  some time to see how these new regulations affect the nature of banking
  within the U.S. The Bottom
  Line In antebellum
  America, numerous attempts at increased centralized control and regulation of
  the banking system were tried, but fears of concentrated power and political
  corruption served to undermine such attempts. Nevertheless, as the banking
  system grew, the need for ever-increasing regulation and centralized control,
  led to the creation of a nationalized banking system during the Civil War,
  the creation of the Federal Reserve in 1913, and the New Deal reforms under
  Roosevelt.4 While the
  increased regulation led to a period of financial stability, commercial banks
  began losing business to more innovative financial institutions,
  necessitating a call for deregulation. Once again, the deregulated banking
  system evolved to exhibit even greater complexities and precipitated the most
  severe economic crisis since the Great Depression. Dodd-Frank was the
  response, but if history is any guide, the story is far from over, or
  perhaps, the pendulum will continue to swing. Why Are
  Banks Regulated? (FYI) January
  30, 2017 By  Julie L Stackhouse       This
  post is the first in a series titled “Supervising Our
  Nation’s Financial Institutions.”
  Supervising Our Nation’s Financial Institutions The
  series, written by Julie Stackhouse, executive vice president and
  officer-in-charge of supervision at the St. Louis Federal Reserve, is
  expected to appear at least once each month throughout 2017. The
  topic of financial deregulation is once again generating news stories. It
  raises a foundational question: “Why is the U.S.
  banking system so heavily regulated?” Banking
  regulation has existed in some form since the chartering of banks and its
  goals have evolved over time. Today, banking regulation serves four main
  purposes. Financial
  Stability Instability
  in the financial system can have material ripple effects into other parts of
  the domestic and international financial sectors. Supervision that is focused
  on financial stability (often called macro-prudential supervision) looks at
  trends and analyzes the likelihood for financial contagion and the possible
  impacts across firms that pose systemic risks. Protection
  of the Federal Deposit Insurance Fund Since
  Jan. 1, 1934, the Federal Deposit Insurance Corp. has insured the deposits
  held in U.S. banks up to a defined amount (currently $250,000 per depositor
  per bank). The federal government serves as a backstop to the insurance fund. In
  exchange for this insurance guarantee, banks pay an insurance premium and are
  also subject to safety and soundness examinations by state and/or federal
  regulators. Oversight of individual financial institutions by banking
  regulators is called micro-prudential supervision. While
  the insurance fund protects depositors, it does not protect shareholders of
  banks. When inappropriate risks are taken and prove unsuccessful, banks will
  fail and be liquidated. Consumer
  Protection Since
  the creation of the Federal Trade Commission in 1914, the federal government
  has had a formal obligation to protect consumers across industries. Since
  that time, numerous laws and regulations have been crafted by various
  agencies to protect bank customers and promote fair and equal access to
  credit. Banks
  conduct financial transactions with consumers either directly (lending to
  consumers and taking consumer deposits) or indirectly (through financial technology
  on the front end, for example). Banking regulators enforce consumer
  protection regulations by conducting comprehensive reviews of bank lending
  and deposit operations and investigating consumer complaints. Competition A
  competitive banking system is a healthy banking system. Banking regulators
  actively monitor U.S. banking markets for competitiveness and can deny bank
  mergers that would negatively affect the availability and pricing of banking
  services. Although
  fewer than 40 banks account for more than 70 percent of all U.S. banking
  assets, as shown in the table below, there are nearly 6,000 institutions of
  all sizes operating in communities across the country. US
  BankSystem While
  all banks are regulated, not all regulations apply to every bank. We’ll discuss some of these differences in future posts. In
  my next post, I’ll discuss how the banking system has
  changed over time—especially over the past 25 years—adding to the complexity and scope of banking regulation
  in the U.S. For discussion: As
  compared with small banks, do big banks are relatively more burdened by
  regulations? Or vice versa?  | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Part II –Bank Run and Bank Failure 
 1.    
  What is bank run? It is rare. Why? 
 2.     How can you
  tell that banks are getting bigger and bigger? Who need big banks?                          What is too big to fail (Bloomberg
  university) video 
 Table of Key Financial Metrics: (The data are collected for
  late 2022 and early 2023 based on available public data)
 
 Definitions
  and Explanations:1.    
  Net Interest Margin
  (NIM): 
 2.    
  Deposit Loan Ratio (DLP): ·       
  Definition:
  DLP shows the proportion of a bank's deposits that have been lent out. A
  higher ratio suggests more aggressive lending. ·       
  Explanation: First
  Republic Bank had a very high DLP of 90%,
  meaning it had lent out a large portion of its deposits, leaving it
  vulnerable to liquidity issues. Similarly, SVB had
  a DLP of 87%, making it susceptible
  to liquidity risks during a sudden bank run, as they lacked sufficient liquid
  reserves to meet withdrawal demands. 3.    
  Capital Adequacy Ratio
  (CAR): 
 Why These Banks Failed:1.    
  High DLPs:
  Banks like First Republic and SVB
  had high DLPs, which meant they aggressively loaned out deposits, leaving
  them with limited liquidity. When depositors began to withdraw funds en
  masse, these banks struggled to meet the demand, leading to bank
  runs. 2.    
  Low CARs:
  With relatively low CARs, these banks had insufficient capital to absorb
  losses. First Republic was particularly
  vulnerable, with a CAR of 8.0%. This low capital
  buffer made it difficult for the bank to weather shocks, particularly as
  interest rates increased and asset values dropped. 3.    
  Interest Rate Risk:
  Rising interest rates played a crucial role in the collapse of these banks. First
  Republic and SVB had significant
  exposure to long-term assets like mortgages and bonds, which lost value as
  interest rates rose. Their failure to manage this interest rate risk caused
  substantial losses. 4.    
  Loss of Depositor Confidence:
  In each case, a loss of depositor confidence led to rapid withdrawals. Signature
  Bank and SVB were particularly
  affected, as large portions of their deposits were uninsured, making
  depositors more likely to withdraw when uncertainty arose. Key Takeaway:·       
  Lessons from SVB and
  First Republic: These banks failed largely due to their high
  DLPs and low CARs, which left them
  vulnerable to liquidity crises and market fluctuations. Understanding these
  metrics helps us see how poor risk management, especially under rising
  interest rates, can lead to financial collapse. · Choosing Banks: By comparing banks with higher CARs and more conservative DLPs, we can better assess the safety of their banking options, focusing on banks that maintain strong capital reserves and prudent lending practices.   Bank Failure ·  Definition of Bank Failure: A bank
  failure occurs when a bank is closed by federal or state regulators because
  it cannot meet its financial obligations to depositors and creditors. ·  Causes of Bank Failure: 
 ·  FDIC’s Role: 
 ·  Bank Runs: A bank run may occur if
  depositors fear they won't be able to withdraw their money, further depleting
  the bank's liquid assets. ·  Uninsured Deposits: It can take
  months or even years for depositors to reclaim uninsured deposits from
  a failed bank. ·  Historical Examples: 
 ·  FDIC Creation: The FDIC was
  established in 1933 following the mass bank failures during the Great
  Depression to protect depositors and prevent future bank panics. 
 
 https://www.fdic.gov/bank/historical/bank/ Why SVB
  Failed? Key Factors Behind the Collapse    
  Quiz       
  Play a
  game hereHow Silicon
  Valley Bank Collapsed in 36 Hours | WSJ What Went Wrong (youtube)1. Liquidity and Deposit Loan Ratio (DLP)
 2. Net Interest Margin (NIM) &
  Profitability
 3. Capital Adequacy Ratio (CAR)
 4. Bank Run & Depositor Behavior
 5. Uninsured Deposits
 6. Interest Rate Risk
 7. Risk Management Failures
 8. Depositor Base
 9. Bond Sales at a Loss
 | What Is a Bank Failure? Definition,
  Causes, Results, and ExamplesBy JULIA KAGAN Updated November
  17, 2021, Reviewed by SOMER ANDERSON, Fact checked by SUZANNE KVILHAUG https://www.investopedia.com/terms/b/bank-failure.asp What Is Bank Failure? A bank failure is the closing of an
  insolvent bank by a federal or state regulator. The comptroller of the
  currency has the power to close national banks; banking commissioners in the
  respective states close state-chartered banks. Banks close when they are
  unable to meet their obligations to depositors and others. When a bank fails,
  the Federal Deposit Insurance Corporation (FDIC) covers the insured portion
  of a depositor's balance, including money market accounts. Understanding Bank
  Failures A bank fails when it can’t meet
  its financial obligations to creditors and depositors. This could occur
  because the bank in question has become insolvent, or because it no longer
  has enough liquid assets to fulfill its payment obligations. KEY TAKEAWAYS ·       When a bank
  fails, assuming the FDIC insures its deposits and finds a bank to take it
  over, its customers will likely be able to continue using their accounts,
  debit cards, and online banking tools. 
   ·       Bank failures
  are often difficult to predict and the FDIC does not announce when a bank is
  set to be sold or is going under. ·       It may take
  months or years to reclaim uninsured deposits from a failed bank. ·       The most
  common cause of bank failure occurs when the value of the bank’s assets falls
  to below the market value of the bank’s liabilities, which are the bank's
  obligations to creditors and depositors. This might happen because the bank
  loses too much on its investments. It’s not always possible to predict when a
  bank will fail. What Happens When a
  Bank Fails? When a bank fails, it may try to
  borrow money from other solvent banks in order to pay its depositors. If the
  failing bank cannot pay its depositors, a bank panic might ensue in which
  depositors run on the bank in an attempt to get their money back. This can
  make the situation worse for the failing bank, by shrinking its liquid assets
  as depositors withdraw cash from the bank. Since the creation of the FDIC,
  the federal government has insured bank deposits up to $250,000 in the U.S. When a bank fails, the FDIC takes
  the reins and will either sell the failed bank to a more solvent bank or take
  over the operation of the bank itself. Ideally, depositors who have money in
  the failed bank will experience no change in their experience of using the
  bank; they’ll still have access to their money and should be able to use
  their debit cards and checks as normal. In the event that a failed bank is
  sold to another bank, account holders automatically become customers of that
  bank and may receive new checks and debit cards. When necessary, the FDIC has
  taken over failing banks in the U.S. in order to ensure that depositors
  maintain access to their funds, and prevent a bank panic. Examples of Bank Failures During the 2007-2008 financial
  crisis, the biggest bank failure in U.S. history occurred when Washington Mutual,
  with $307 billion in assets, closed its doors. Another large bank failure had
  occurred just a few months earlier when IndyMac was seized. Special Considerations The FDIC was created in 1933 by
  the Banking Act (often referred to as the Glass-Steagall Act). In the years
  immediately prior, which marked the beginning of the Great Depression,
  one-third of American banks had failed. During the 1920s, before the Black
  Tuesday crash of 1929, an average of about 70 banks had failed each year
  nationwide. During the first 10 months of the Great Depression, 744 banks
  failed, and during 1933 alone, about 4,000 American banks failed. By the time
  the FDIC was created, American depositors had lost $140 billion due to bank
  failures, and without federal deposit insurance protecting these deposits,
  bank customers had no way of getting their money back. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Part III: The Impact
  of Lower Interest Rates on Bank Stability How to prepare personal
  finances for Fed interest rate cuts (youtube)When
  Interest Rates Rise: refer to https://www.investopedia.com/ask/answers/041015/how-do-interest-rate-changes-affect-profitability-banking-sector.asp1.    
  Increased Profitability: 
 2.    
  Strong Loan Demand: 
 3.    
  Example of Profit: 
 4.    
  Risk of Overly High
  Rates: 
 5.    
  Bank Stocks: 
 When
  Interest Rates Drop:1.    
  Reduced Profit Margins: 
 2.    
  Increased Loan Demand: 
 3.    
  Example of Profit: 
 4.    
  Pressure on Savings: 
 In
  summary: 
 | How Interest Rate Changes Affect the Profitability of Banking By Mary Hall Updated March 08, 2024 Reviewed by
  Thomas Brock  Banks make money by accepting cash deposits
  from their customers in return for interest payments and then investing that
  money elsewhere. The bank's profit is the difference between the interest
  they pay their depositors and the yield they make through investing. Higher interest rates increase the yield on
  their investments. Interest rates can go too high. If they reach a level that
  makes businesses and consumers hesitate to borrow, the lending side of
  banking starts to suffer. Key
  Takeaways ·      
  Interest rates
  and bank profitability are connected, with banks benefiting from higher
  interest rates. ·      
  When interest
  rates are higher, banks make more money by taking advantage of the greater
  spread between the interest they pay to their customers and the profits they earn
  by investing. ·      
  A bank can
  earn a full percentage point more than it pays in interest simply by lending
  out the money at short-term interest rates. ·      
  Moreover,
  higher interest rates tend to reflect a healthy economy. Demand for loans to
  businesses and consumers should be high, with the bank making better returns
  on those loans. ·      
  There's the
  risk that interest rates will go too high, discouraging borrowers. The Federal Reserve reduces interest rates in
  order to encourage businesses and consumers to borrow more money, adding fuel
  to the economy. The banks will benefit by the rising demand for loans. But
  the profit from each loan will be lower, as will the amount the bank makes by
  investing in short-term debt securities. How
  the Banking Sector Makes a Profit The banking industry encompasses not only
  corner banks but investment banks, insurance companies, and brokerages. All
  have massive cash holdings. They hold onto a small portion of that cash to
  ensure liquidity. The rest is invested. Some
  of it is invested in loans to businesses and consumers. Much of it is
  invested in short-term Treasury securities. This is the wave of cash that
  originates with the U.S. Treasury and flows constantly through the banking
  system. Even the very low interest
  rates that short-term Treasury notes yield are greater than the interest the
  banks pay to their customers.   It's similar to the way that an increase in oil
  prices benefits oil drillers. They make more money for the same expenditure
  of resources. Example of Interest Rate Impact on Bank
  Earnings Consider a bank that has $1 billion on deposit.
  The bank pays its customers an annual percentage rate of 1% interest, but the
  bank earns 2% on that cash by investing it in short-term notes. The bank is
  earning $20 million on its customers' accounts but returning only $10 million
  to its customers. If the central bank then raises rates by 1%, the federal
  funds rate will rise from 2% to 3%. The bank will then be yielding $30
  million on customer accounts. The payout to customers will still be $10
  million. The bank may be forced to raise the interest
  rates it pays on deposits if higher interest rates persist. But the vast
  majority of its customers won't go in search of a better return for their
  savings. This is a powerful effect. Whenever
  economic data or comments from central bank officials hint at rate hikes,
  bank stocks rally first. When interest rates rise, so does the spread
  between long-term and short-term rates. This is a boon to the banks since
  they borrow on a short-term basis and lend on a long-term basis. Another
  Way Interest-Rate Hikes Help Interest rate increases tend to occur when
  economic growth is strong. Businesses are expanding, and consumers are
  spending. That means a greater demand for loans. As interest rates rise, profitability on loans
  increases, as there is a greater spread between the federal funds rate that
  the bank earns on its short-term loans and the interest rate that it pays to
  its customers. In fact, long-term rates tend to rise faster
  than short-term rates. This has been true for every rate hike since the
  Federal Reserve was established early in the 20th century. It is a reflection of the strong underlying
  conditions and inflationary pressures that tend to prompt the Federal Reserve
  to increase the interest rates it charges. It's also an optimal confluence of events for
  banks, as they borrow on a short-term basis and lend on a long-term basis. Note
  that if interest rates rise too high, it can start to hurt bank profits as
  demand from borrowers for new loans suffers and refinancings decline. Are
  Higher Interest Rates Good for Stocks? Generally,
  higher interest rates are bad for most stocks. A big exception is bank stocks, which thrive
  when rates rise. For everybody else, it's a delicate balancing act. Interest
  rates rise because the economy is booming. But increasing interest rates make
  businesses and consumers more cautious about borrowing money. This is why the Federal Reserve acts as it
  does. It's raising or lowering the interest rates it charges to the banks in
  order to cool the economy or rev it up. Are
  Higher Interest Rates Good for Bonds? When interest rates increase, new bonds that
  are issued now have to carry a higher rate of return in order to be
  attractive to buyers. However, the owners of older bonds are stuck
  with their lower rates of return. On the secondary market where bonds are
  resold, their value will decrease to compensate for the lower return. The
  investor who holds bonds in an investment portfolio doesn't lose money but
  does lose the opportunity to invest in higher-yield bonds. Are
  Higher Interest Rates Good for the U.S. Dollar? Higher interest rates are good for the U.S.
  dollar. When the Federal Reserve tweaks its short-term interest rates, the
  change ripples through all other types of loans, including the loans that are
  represented by U.S. Treasury bonds and, indeed, all other dollar-denominated
  investments. When U.S. rates are high in comparison with
  those of other nations, money pours out of foreign investments and into U.S.
  investments. That tends to make the U.S. dollar rise in value against other
  currencies. The Bottom Line A rise in interest rates automatically boosts a
  bank's earnings. It increases the amount of money that the bank earns by lending
  out its cash on hand at short-term interest rates. At the same time, the
  bank's costs of doing business are unaffected. Their customers are unlikely
  to pull their cash out of their savings accounts in order to chase a slightly
  higher-yielding savings account. Thus, the spread widens between the interest
  the bank pays its customers and the interest it earns by lending it out. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Part IV: The Role of
  Regulation in Bank Stability  Quiz    Game A
  Brief History of
  Banking and Regulations (Lessons from Hoover Boot Camp) (youtube video)Video summary  Summary:
  The speaker provides an overview of the history and rationale behind
  banking regulation in the U.S., highlighting how financial crises have
  shaped regulatory responses. The talk is structured in three parts: 
 4.    
  The
  5% Trigger: How Small Asset Declines Lead to Bank Failures ·      
  One
  key point discussed is how banks' balance sheets are highly leveraged,
  meaning even a small shock—such as a 5% decline in asset value—can
  wipe out their equity, leading to insolvency and potential failure.  ·      
  This
  fragility in the banking system was a significant factor during the 2008
  financial crisis when many banks went under due to deteriorating asset
  values.  ·      
  The
  speaker emphasizes that this 5% trigger is a threshold at which the
  balance sheet collapses, causing the bank to be unable to pay back its debt
  holders, leading to bankruptcy.  Key Takeaways: 
 
 Key
  Takeaways from https://www.investopedia.com/articles/investing/011916/brief-history-us-banking-regulation.asp  
 Major
  Laws and Acts:
 Conclusion:
 Homework (Due with the first midterm Exam) Is Your Bank Safe?Research the following key metrics for your bank: 
 1. Compare these metrics with the figures listed in the table provided (Chase, VyStar, SVB, etc.). 2. Discuss: Based on these comparisons, do you think your bank is safe? Why or why not? 3.    
  As a banker: Do you believe
  that lower interest rates would help your bank survive or even thrive? Why or
  why not? | A Brief History of U.S.
  Banking Regulation By
  Matthew Johnston Updated August 12, 2024 Reviewed by Michael J Boyle Fact
  checked by Suzanne Kvilhaug https://www.investopedia.com/articles/investing/011916/brief-history-us-banking-regulation.asp Alexander
  Hamilton once observed, "Most commercial nations have found it necessary
  to institute banks, and they have proved to be the happiest engines that ever
  were invented for advancing trade." Since Hamilton's day, the United
  States has grown into the largest economy in the world. That growth has been
  accompanied by ever-evolving banking regulation, which has swung like a
  pendulum over the past three centuries between greater and lesser control.
  Competing forces like the desire for financial stability versus more economic
  freedom, or the fear that too much power is concentrated in too few hands,
  have kept the pendulum swinging back and forth. Here
  is a brief history of banking regulation in the U.S. Key Takeaways ·      
  As the U.S. evolved into the world's
  largest economy, its regulatory framework has evolved as well. ·      
  Early regulations aimed to foster economic
  financial stability through centralized control of the banking system.
  Opponents, however, maintained that such regulatory authority gave the
  federal government too much power in comparison to the states. ·      
  In the years following the Civil War, an
  assortment of financial crises and bank panics led to new regulations. The
  Great Depression of the 1930s also gave rise to significant reforms. ·      
  The 1980s saw a move toward deregulation,
  soon followed by re-regulation in the wake of the subprime mortgage crisis
  and the Great Recession of the early 2000s. The First and Second Banks
  of the United States The
  First Bank of the United States was established in 1791. Although it helped
  bring a degree of economic stability to the young nation, many feared that it
  gave undue powers to the federal government and considered it
  unconstitutional. As a result, its charter was not renewed in 1811. The U.S.
  government turned to state banks to finance the War of 1812, but with the
  significant over-expansion of credit that followed, it became apparent that
  financial order needed to be restored. 
  In response, the Second Bank of the United States was chartered in
  1816. It, too, would succumb to political fears over the amount of control it
  gave the federal government and it was dissolved in 1836. The End of Charters, the
  Rise of Free Banking Obtaining
  an official legislative charter was highly political at both the federal and
  state levels, depending more on political connections than proven competence
  in financial matters. The bribing of legislators was fairly common. By
  the time the Second Bank dissolved, a new era of free banking was emerging,
  with a number of states passing laws in 1837 that abolished the requirement
  that banks obtain an officially legislated charter to operate. By 1860, a
  majority of states had passed such laws. During
  this time of free banking, anyone could operate a bank on the condition that
  all the notes it issued were backed by proper security. While that helped
  reinforce the credibility of banknotes, it did not guarantee immediate
  redemption in specie (gold or silver), which would serve to be a crucial
  point. The
  era of free banking suffered from financial instability, including several
  banking crises. It also made for a chaotic currency market, characterized by
  thousands of different banknotes circulating at varying discount rates. This
  instability and disorder led to a renewed call for more regulation and
  central oversight in the 1860s. From the Civil War to the
  New Deal The
  free banking era, characterized as it was by a complete lack of federal
  control and regulation, ended with the National Banking Act of 1863 (and its
  later revisions in 1864 and 1865), which aimed to replace the old state banks
  with nationally chartered ones. The Office of the Comptroller of the Currency
  (OCC) was created to issue these new bank charters as well as see to it that
  national banks maintained the requirement to back all their notes with
  holdings of U.S. government securities. The
  new national banking system helped return the country to a more uniform and
  secure currency but ultimately at the expense of an elastic currency that
  could expand and contract according to commercial and industrial needs. The
  growing complexity of the U.S. economy highlighted the inadequacy of an
  inelastic currency, which helped fuel frequent financial panics throughout
  the rest of the nineteenth century. It
  became apparent during the bank panic of 1907 that America's banking system
  was out of date. A committee gathered in 1912 to examine the situation and
  found that the nation's money and credit were becoming increasingly concentrated
  in the hands of relatively few men. The Federal Reserve Act of 1913 was
  approved during the presidency of Woodrow Wilson to wrest control of the
  nation's finances from banks while creating a mechanism to enable a more
  elastic currency and greater supervision over the banking infrastructure. Although
  the newly established Federal Reserve improved the nation's payments system
  and created a more flexible currency, the country soon faced another
  financial crisis, exacerbated by the 1929 stock market crash and banking
  panics in 1930 and 1931. The
  Great Depression, which began in 1929 and continued, by some measures, until
  1941, led to new regulations instituted by President Franklin D. Roosevelt as
  part of his administration's New Deal. The Glass-Steagall Act of 1933 created
  the Federal Deposit Insurance Corporation (FDIC), which implemented the
  regulation of deposit interest rates while separating commercial banking and
  investment banking. The Banking Act of 1935 served to give the Federal Reserve,
  also called the Fed, more centralized power. 1980s Banking Deregulation The
  period following the banking reforms of the New Deal up until about 1980 was
  marked by a relative degree of banking stability and economic expansion.
  Still, critics argued that regulation also made American banks less
  innovative and competitive than they were previously. The heavily regulated
  commercial banks were losing increasing market share to less-regulated and
  more innovative institutions. This led to a wave of deregulation throughout
  the last two decades of the 20th century. Those changes included: Congress
  passed the Depository Institutions Deregulation and Monetary Control Act in
  1980, which served to deregulate financial institutions that accept deposits
  while strengthening the Fed's control over monetary policy. estrictions
  on the opening of bank branches in different states that had been in place
  since the McFadden Act of 1927 were removed under the Riegle-Neal Interstate
  Banking and Branching Efficiency Act of 1994. The
  Gramm-Leach-Bliley Act of 1999 repealed significant aspects of the
  Glass-Steagall Act as well as the Bank Holding Act of 1956, both of which had
  served to sever investment banking and insurance services from commercial
  banking.  From 1999 onward, banks could now offer
  commercial banking, securities, and insurance services under one roof.  These
  moves helped to accelerate a trend toward greater consolidation and
  conglomeration in the banking sector, with more than 4,300 bank mergers in
  the 1980s and more than 6,000 in the 1990s. As
  banks became bigger, their financial services and products became more
  complex. Banks started to offer new products like derivatives. They also
  started packaging traditional financial assets like mortgages and selling
  them to investors through the process of securitization. Banking
  Regulation Following the Global Financial Crisis of 2008 The
  subprime mortgage meltdown beginning in 2007, the ensuing global financial
  crisis, and the need to bail out banks deemed "too big to fail"
  caused the government to rethink the financial regulatory framework. In
  response to the crisis, Congress passed the Dodd-Frank Wall Street Reform and
  Consumer Protection Act in 2010. Some
  of Dodd-Frank's protections were rolled back under the Trump administration
  in 2018. In particular, the new rules loosened restrictions on institutions
  with under $250 billion in assets and eliminated the need for them to pass
  stress tests. Then,
  in 2021, the newly arrived Biden administration signaled its intention to
  tighten the government's oversight of banks. A July 2021 executive order on
  promoting competition in the American economy called for greater scrutiny of
  bank mergers by the Department of Justice and federal banking regulators.
  "Excessive consolidation," the order explained, "raises costs
  for consumers, restricts credit for small businesses, and harms low-income
  communities." What Is a Central Bank? A
  central bank is a public financial institution responsible for overseeing a
  nation's monetary system. The central bank of the United States is the
  Federal Reserve System, which describes its mission as carrying out "the
  nation's monetary policy guided by the goals set forth in the Federal Reserve
  Act, namely 'to promote effectively the goals of maximum employment, stable
  prices, and moderate long-term interest rates.'" What Is a National Bank? National
  banks in the United States are financial institutions that are chartered by
  the U.S. Treasury and members of the Federal Reserve System. Examples include
  Bank of America, Chase Bank, Citibank, PNC Bank, U.S. Bank, and Wells Fargo. What Is the Dodd-Frank Act? The
  Dodd-Frank Act of 2010, more formally known as the Dodd-Frank Wall Street
  Reform and Consumer Protection Act, is a major set of financial reforms
  enacted in the wake of the Great Recession of 2007 to 2009. Among other
  provisions, it clamped down on speculative trading by banks, increased
  government oversight of the banking sector, and gave the government the power
  to liquidate ailing banks. It also created the Consumer Financial Protection
  Bureau. The Bottom Line Since
  the founding of the United States, there have been numerous attempts to
  centralize the control and regulation of the country's banking system. Prior
  to the Civil War of the 1860s, fears of concentrated power and political
  corruption served to undermine such attempts. But as the banking system grew,
  the need for greater regulation and federal control became more widely accepted.
  That led to the creation of a nationalized banking system during the Civil
  War, the creation of the Federal Reserve in 1913, and the New Deal reforms of
  the 1930s and 1940s. While
  more regulation led to a long period of financial stability, banks began
  losing business to more innovative financial institutions, resulting in a
  move toward deregulation in the 1980s and 1990s. But it wasn't long before
  the mortgage meltdown of 2007 and the most severe economic crisis since the
  Great Depression led to a call for re-regulation and to the passage of the
  Dodd-Frank financial reforms of 2010. The Trump administration rolled back
  some of those rules, but much of Dodd-Frank remains in place and the Biden
  administration has indicated its desire to restore and tighten bank
  regulations, particularly with regard to mergers. If
  history is any guide, the story is far from over and the regulation pendulum
  will continue to swing. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| How AI and FinTech Are
  Shaping the Future of Banking    Quiz Based on the article by Mr.
  Kreger posted at https://www.forbes.com/councils/forbesbusinesscouncil/2023/03/20/the-future-of-ai-in-banking/ ·  AI’s Role in Personalization: AI can
  analyze customer data to provide personalized services like financial
  advice, targeted product recommendations, fraud detection, and faster
  customer support. It helps improve customer engagement and retention by creating
  tailored experiences. ·  Automation and Efficiency: AI can
  automate routine tasks such as account balance inquiries, password
  resets, and loan applications, allowing human representatives to
  handle more complex issues. This increases efficiency, reduces costs, and
  offers 24/7 support. ·  Conversational Banking: AI-powered chatbots
  can offer a seamless user experience by handling money transfers, financial
  advice, and credit score monitoring through chat or voice
  interfaces, making banking operations simpler for customers, including
  nonnative speakers. ·  Use Cases: AI can enhance the
  banking experience by handling tasks like fraud prevention, financial
  planning, and customer service while improving account
  management and insurance claims processes. ·  Challenges: Banks face challenges in
  ensuring data security and privacy, training AI models to understand
  banking-specific terminology, and ensuring customer adoption of AI
  tools. Ensuring a secure and user-friendly interface is critical for
  success. How Banks Are Utilizing
  Artificial Intelligence (Bloomberg youtube video)The Application of
  Blockchain in the Banking Industry JPMorgan Chase –
  Financial Services with Quorum·       
  Overview: JPMorgan
  Chase developed Quorum, an enterprise-focused version of Ethereum, to
  facilitate secure and efficient financial transactions. Quorum is used for
  various applications, including payment processing, interbank transfers, and
  blockchain-based financial instruments. ·       
  Blockchain Platform: Quorum
  (a fork of Ethereum developed by JPMorgan Chase) https://phemex.com/academy/what-is-quorum-jp-morgan ·       
  Website:
  Quorum by ConsenSys  https://consensys.io/blog/what-is-consensys-quorum ·       
  Additional Information:
  Quorum enhances Ethereum's capabilities by adding privacy features and
  improving performance, making it suitable for enterprise use cases in the
  financial sector. JP Morgan’s Blockchain:
  Tokenizing Money Market Funds (youtube video)Summary
  of the above videoJP Morgan
  Chase is pioneering the use of blockchain technology in the financial sector
  by tokenizing money market funds, which invest in short-term debt securities
  like Treasury bills and commercial paper. Through its Onyx blockchain
  platform, the bank converts these fund shares into digital tokens, allowing
  investors to keep their assets invested while using the shares as collateral
  for other financial obligations. This process reduces costs, avoids
  liquidating the assets, and improves the client experience. Blockchain
  technology brings three core benefits in this context: 
 Takeaway:By
  leveraging blockchain for money market funds, JP Morgan Chase is transforming
  financial operations, allowing for seamless collateral management, reducing costs,
  and enhancing transparency. This innovative approach is a key example of how
  blockchain can streamline asset management and improve the efficiency of the
  financial sector. Comment:This
  technology marks a significant shift in finance, offering a clear
  demonstration of blockchain’s potential to
  revolutionize the handling of assets. It's exciting to see JP Morgan at the
  forefront of this transformation, and it’ll be
  interesting to watch how blockchain continues to reshape the financial
  landscape. What other financial products do you think will be tokenized next? | The Future Of AI In Banking Alex
  Kreger  Forbes Councils Member  Mar 20, 2023,09:45am EDT https://www.forbes.com/councils/forbesbusinesscouncil/2023/03/20/the-future-of-ai-in-banking/   In
  just two months after its launch, GPT-3-powered ChatGPT reached 100 million
  monthly active users, becoming the fastest-growing app in history, according
  to a UBS report (via Reuters). ChatGPT is a language model that uses natural
  language processing and artificial intelligence (AI) machine learning
  techniques to understand and generate human-like responses to user queries. I
  compare GPT's appearance with the launch of the internet in terms of its
  impact on the future of humanity. It enables machines to understand and
  generate language interactions in a revolutionary way. GPT (generative
  pre-trained transformer) AI could disrupt how we engage with technology much
  like the internet did. It's
  only been about two months since the launch (as of the time of this writing),
  but we can already see how much ChatGPT impacts our experience. The internet
  is full of examples of crazy prompts to which ChatGPT and other large
  language models (LLMs) often provide accurate and competent answers. People
  are rapidly adopting ChatGPT and similar models for uses such as content
  creation, programming, teaching, sales, education and so on. The
  main question for me, as a financial UX strategist and founder of a company
  with services including conversational banking, is how such technology will
  impact the banking and financial customer experience: because customer
  experience is key to business success in the digital age. According
  to a North Highland survey (via Consulting.us), 87% of leaders surveyed
  perceived CX as a top growth engine. Emplify research found that 86% of
  consumers would leave a brand they were previously loyal to if they had just
  two or three bad customer service experiences. An Accenture study from 2018
  found that 91% of consumers are more likely to buy from brands that
  recognize, recall and provide relevant offers and recommendations. To
  secure a primary competitive advantage, the customer experience should be
  contextual, personalized and tailored. And this is where I think AI will
  become the breakthrough technology that supports this goal. According to a
  survey from The Economist Intelligence Unit, 77% of bankers believe that the
  ability to unlock the value of AI will be the difference between the success
  or failure of banks. In a 2021 McKinsey survey, 56% of respondents report AI
  usage in at least one function of their organizations. I
  forecast that LLMs and AI will impact the user experience in the banking
  industry in multiple ways. First,
  they can analyze customer data to understand their preferences and needs and
  use this information to provide personalized customer service and support to
  users by addressing their queries and concerns in real-time. Banks could also
  use AI models to provide customized financial advice, targeted product
  recommendations, proactive fraud detection and short support wait times. AI
  can guide customers through onboarding, verifying their identity, setting up
  accounts and providing guidance on available products. Second,
  AI can automate many routine tasks, such as account balance inquiries and
  password resets, freeing customer service representatives up to focus on
  complex issues. It could increase efficiency and reduce costs for banks while
  providing faster and more accurate customer support. And all of this would be
  available 24/7, making it easy for customers to get help by answering
  questions, resolving issues and providing financial education outside of
  regular business hours. Third,
  companies could leverage AI to provide a conversational banking experience by
  integrating models with banking applications to provide a single point of
  contact for users to make transactions, view account information and receive
  alerts through the chat or voice interface in multiple languages. It could
  simplify the user experience and reduce the complexity of banking operations,
  making it easier for even nonnative speakers to use banking and financial
  services worldwide. So,
  what are the obvious use cases for AI and LLMs in banking? 1.
  Account Inquiries Banking
  users can employ chatbots to monitor their account balances, transaction
  history and other account-related information. 2.
  Money Transfers Users
  could potentially make fund transfers to other accounts or to pay merchants
  through a chatbot. 3.
  Loan Applications Banks
  can deploy chatbots to assist users in applying for loans and to guide them
  through the application procedure. 4.
  Credit Score Monitoring Companies
  can develop chatbots to assist users in checking their credit ratings and
  provide advice on how to improve them. 5.
  Financial Advice Banks
  could train chatbots to provide investment information and assist users in
  making informed investment decisions. 6.
  Fraud Prevention Banks
  could explore ways to use AI to prevent fraud by monitoring user transactions
  and spotting unusual activity. 7.
  Customer Service Banks
  could train chatbots to provide rapid and effective customer care by
  answering common questions and fixing simple issues. 8.
  Account Management Banks
  could train AI models to assist users in managing their accounts by arranging
  automatic payments, changing personal information and more. 9.
  Insurance Claims Banks
  could also create chatbots with the capability to submit insurance claims and
  get information about the claims procedure. 10.
  Financial Planning Chatbots
  could assist users with financial planning tasks, such as budgeting and
  setting financial objectives. Challenges
  And Considerations For Banks Despite
  the inspiring prospects that AI technology opens up for improving the
  customer experience in banking, implementing it into banking products can
  pose some challenges. One of the main challenges is safeguarding the security
  and privacy of customer data. Banks should ensure that their chat interface
  is secure and that sensitive data is protected from unauthorized access or
  disclosure. Another
  challenge is training an AI model to understand the language and terminology
  specific to the banking industry. Banks should provide relevant training data
  and integrate the model with their existing systems to ensure that it can
  provide accurate and appropriate responses to user queries. And
  one more challenge is customer adoption. Banks should ensure that customers
  are aware of the chat interface and its benefits and that they are
  comfortable using it. This will require them to make additional product UX
  design considerations and invest in education efforts to provide an
  easy-to-use chat interface. Natural
  language-processing capabilities and an understanding of customer data mean
  AI could become an excellent solution to provide a more personalized,
  efficient and convenient user experience in banking and financial services. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Let’s build a trading App! (FYI only)     Stock Trading App How to Build a Stock Trading App: Step-by-Step Video Guide (newly added) Prep:  Fetch, Copy,
  and Use S&P 500 Symbols in Google Sheets1.    
  Fetch S&P 500
  Symbols: ·      
  First, you'll pull the stock symbols for
  the S&P 500 companies from Wikipedia using the following formula: · This will retrieve a table with the S&P 500 companies, including stock symbols, company names, and other details, into your Google Sheet. 2.    
  Copy the Stock Symbols: ·      
  After the table has been imported, locate
  the column with the stock symbols (usually the first column). ·      
  Select the entire stock symbol column,
  copy the data, Paste values only" into a new sheet.  ·      
  Delete the sheet where you originally
  fetched the data from Wikipedia (e.g.,  ·      
  Right-click the tab of the new sheet and
  select "Rename", then
  type  Now,
  your Google Sheet will have a static list of S&P 500 stock symbols in  Step 1: Set Up Google Sheets with Google Finance Data1.    
  Create a new Google
  Sheet: ·      
  Open Google Sheets by going to sheets.google.com. ·      
  Click on Blank to
  create a new sheet. ·      
  Rename the sheet to something like Stock
  Data by clicking on the name in the top-left corner. 2.    
  Set up columns
  for stock data: In the first row of your sheet, set up the headers like this: ·      
  A1: Symbol ·      
  B1: Price ·      
  C1: Volume ·      
  D1: Price Change ·      
  E1: Change Percentage ·      
  F1: High 52 Weeks ·      
  G1: Low 52 Weeks ·      
  H1: Market Cap ·      
  I1: PE Ratio Your
  sheet will look like this: 
 3.    
  Use Google Finance
  formulas to get stock data: You’ll
  now populate the sheet using Google Finance functions.
  Below are the formulas you can use in each row starting from A2: ·      
  A2 (Symbol):
  Enter the stock symbol (e.g.,  ·      
  B2 (Price):  ·      
  C2 (Volume):  ·      
  D2 (Price Change):  ·      
  E2 (Change Percentage):  ·      
  F2 (High 52 Weeks):  ·      
  G2 (Low 52 Weeks):  ·      
  H2 (Market Cap): Use
  this formula to estimate Market Cap:  ·      
  I2 (PE Ratio):  Your
  sheet will now pull live data from Google Finance
  for the stock symbol you enter in A2. If you
  want multiple stocks, you can enter more symbols in A3,
  A4, etc., and the formulas will automatically fetch the data
  for each stock. Example: 
 Step 2: Create the Web App in Google Apps Script1.    
  Open Google Apps Script: ·      
  Go to Extensions > Apps
  Script from your Google Sheet. 2.    
  Create the main function
  to fetch data and calculate Buy/Sell/Hold: Paste
  the following code into the script editor: function doGet() {   return HtmlService.createHtmlOutputFromFile('index')       .setTitle('Stock Trading App'); } function getStockData() {   try {     const sheet = SpreadsheetApp.getActiveSpreadsheet().getSheetByName('Sheet1');     const lastRow = sheet.getLastRow();     const data = sheet.getRange(`A2:I${lastRow}`).getValues();          const updatedData = data.map(row => {       const price = row[1];       const high52 = row[5];       const low52 = row[6];       const upperLimit = high52 * 0.95;       const lowerLimit = low52 * 1.05;       let decision = 'HOLD';              if (price <= lowerLimit) {         decision = 'BUY';       } else if (price >= upperLimit) {         decision = 'SELL';       }              return [...row, decision];     });          Logger.log(updatedData.slice(0, 10)); // Log only
  first 10 rows to avoid output being truncated     return updatedData;   } catch (error) {     Logger.log('Error fetching stock data: ' + error.message);     return [];   } } function refreshStockData() {   getStockData(); // This calls your existing function that fetches
  and updates stock data } This
  script will calculate whether to Buy, Sell,
  or Hold the stock based on a 5% deviation from the 52-week high and low
  prices. Step 3: Create the HTML Interface1.    
  Add an HTML file: ·      
  Click on the +
  icon next to "Files" in the Apps Script editor and select HTML. ·      
  Name the file  2.    
  Paste the following code into
  the  <!DOCTYPE html> <html>   <head>     <title>Stock Trading
  App</title>     <style>       body { font-family: Arial, sans-serif; }       table { width: 100%; border-collapse: collapse; margin-top: 20px; }       th, td { border: 1px solid black; padding: 8px; text-align: left; }       th { background-color: #f2f2f2; }       .buy { color: green; }       .sell { color: red; }       .hold { color: black; }     </style>   </head>   <body>     <h2>Stock Trading
  App</h2>     <!-- Add the brief description here -->     <p>This app
  dynamically calculates trading decisions based on the stock's current price
  compared to its 52-week high and low prices.</p>     <ul>       <li><strong>Buy:</strong> The price is within 5%
  above the 52-week low, suggesting a buying opportunity.</li>       <li><strong>Sell:</strong> The price is
  within 5% below the 52-week high, indicating a good time to sell.</li>       <li><strong>Hold:</strong> The price is
  in between these levels, suggesting you should hold for now.</li>     </ul>     <button onclick="fetchStockData()">Get Stock
  Data</button>     <div id="stock-data">       <!-- Stock data will be displayed here -->     </div>     <script>       function fetchStockData() {         google.script.run.withSuccessHandler(displayStockData).getStockData();       }       function displayStockData(data) {         const container = document.getElementById("stock-data");         let html = "<table><tr><th>Symbol</th><th>Price</th><th>Volume</th><th>Price
  Change</th><th>Change Percentage</th><th>High 52
  weeks</th><th>Low 52 weeks</th><th>Market
  Cap</th><th>PE</th><th>Decision</th></tr>";         data.forEach(row => {           const symbol = row[0];           const price = row[1];           const volume = row[2];           const priceChange = row[3];           const changePercentage = row[4];           const high52 = row[5];           const low52 = row[6];           const marketCap = row[7];           const pe = row[8];           const decision = row[9];           // Apply color coding based on the decision           let decisionClass = '';           if (decision === 'BUY') {             decisionClass = 'buy';           } else if (decision === 'SELL') {             decisionClass = 'sell';           } else if (decision === 'HOLD') {             decisionClass = 'hold';           }           html += `<tr>              
        <td>${symbol}</td>              
        <td>${price}</td>              
        <td>${volume}</td>              
        <td>${priceChange}</td>              
        <td>${changePercentage}</td>              
        <td>${high52}</td>              
        <td>${low52}</td>              
        <td>${marketCap}</td>              
        <td>${pe}</td>              
        <td class="${decisionClass}">${decision}</td>              
       </tr>`;         });         html += "</table>";         container.innerHTML = html;       }     </script>   </body> </html>   Step 4: Deploy the Web App
 Step 5: Test the Web App
 SummaryYou
  have now successfully created a Stock Trading Web App
  using Google Sheets to pull live data from Google Finance and Google Apps
  Script to calculate dynamic Buy, Sell,
  and Hold decisions based on 52-week high/low
  prices. 
 Frontend:
  The website for this app:  https://script.google.com/macros/s/AKfycbxJMOQYuGBer2CPceo8NjN7bkee8uaLl9O_GtkmidA4UBJkKjV0AKUUJ2GMP-833vLdWg/exec Backend:
  The code.gs script used in
  Google Apps Script for the app   | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| First Midterm Exam – 9/17, in class, closed book, closed notes First
  Midterm Exam Study Guide    First Midterm Exam Answers1.    
  Introduction to the
  Federal Reserve System: ·      
  Purpose of the Fed: Central banking,
  monetary policy, and regulating financial institutions. ·      
  Structure: Board of Governors, 12 Federal
  Reserve Banks, and the Federal Open Market Committee (FOMC). ·      
  Tools of the Fed: Open market operations,
  discount rate, and reserve requirements. ·      
  Goals of the Fed: Maximum employment,
  stable prices, and moderate long-term interest rates. 2.    
  Monetary Policy: ·      
  Expansionary vs. contractionary policy. ·      
  How the Fed influences interest rates and
  inflation. ·      
  Role of money supply in the economy. 3.    
  Banking Basics: ·      
  Types of banks: Commercial banks, credit
  unions, investment banks. ·      
  Role of banks in the economy: Facilitating
  loans, deposits, and managing payments. ·      
  Deposit insurance and the FDIC (Federal
  Deposit Insurance Corporation). 4.    
  Bank Regulation: ·      
  Key regulatory agencies: FDIC ·      
  Major banking regulations: Dodd-Frank Act,
  Glass-Steagall Act 5.    
  Interest Rates and their
  Effect: ·      
  Relationship between the Fed's policy rate
  and consumer interest rates. ·      
  Impact on loans, savings, and overall economic
  activity. 6.    
  Banking Crises and
  Failures: ·      
  Historical examples: The Great Depression,
  the 2008 Financial Crisis. ·      
  Lessons learned from these crises. ·      
  Role of the Fed during economic downturns. Test
  Structure:1.    
  True/False Questions (Sample
  Questions – total 50 t/f questions): 1.     
  The Federal Reserve is responsible for
  printing money in the United States. (False) 2.     
  The Federal Open Market Committee sets
  fiscal policy. (False) 3.     
  Commercial banks are not allowed to invest
  in the stock market. (True) 2.    
  Short Answer Questions
  (Sample Questions – 3 questions will be selected):   
 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Chapter 3 Financial
  Instruments, Financial Markets, and Financial Institutions    Part I: Order
  types | 
| Order Type | Current Price | Limit/Stop Price | Future Price (Drops to $165) | Result (Price Drops) | Future Price (Rises to $210) | Result (Price Rises) | 
| Limit Buy | $183  | $183  | $165  | Bought at $165. No gain/loss. | $210  | No trade triggered. | 
| Market Buy | $183  | - | $165  | Bought at $183. Lost $18. | $210  | Bought at $183. Gained $27. | 
| Limit Sell | $183  | $190  | $165  | No sale triggered. | $210  | Sold at $190. Gained $7, but missed $20 extra gain. | 
| Market Sell | $183  | - | $165  | Sold at $183. Avoided $18 loss. | $210  | Sold at $183. Missed $27 gain. | 
| Stop Buy | $183  | $190  | $165  | No trade. Price never hit $190. | $210  | No trade. Price never hit $190. | 
| Stop Sell | $183  | $170  | $165  | Sold at $170. Avoided $5 more loss. | $210  | No trade. Price never hit $170. | 
| Short Sell | $183  | - | $165  | Shorted at $183. Gained $18. | $210  | Shorted at $183. Lost $27. | 
A Limit
  Sell order is used when you want to sell your stock only
  if the price reaches a certain level or higher. This order allows you to lock
  in a target profit or avoid selling at a price lower than
  what you want.
Explanation:
Explanation:
·       
  Current Price:
  $183
·       
  Limit/Stop Price:
  N/A (Market Buy doesn’t have a limit price)
·       
  Future Price (Drops to
  $165): You placed a Market
  Buy, which means you bought the stock immediately at $183.
  The price then dropped to $165.
·       
  Future Price (Rises to
  $210): You placed a Market
  Buy at $183, so you bought the
  stock immediately at that price. The price then rose to $210.
·       
  Current Price:
  $183
·       
  Limit/Stop Price:
  N/A (Market Sell doesn’t have a limit price)
·       
  Future Price (Drops to
  $165): You placed a Market
  Sell, which means you sold the stock immediately at $183.
  The price then dropped to $165.
·       
  Future Price (Rises to
  $210): You placed a Market
  Sell at $183, so you sold
  immediately at that price. The price then rose to $210.
 
· Current Price: $183
· Limit/Stop Price: $190
· Future Price (Drops to $165): You placed a Stop Buy at $190. The price dropped to $165, so your order was not triggered because the stock never reached your stop price.
· Future Price (Rises to $210): You placed a Stop Buy at $190. The price rose to $210, so your order was triggered at $190 and you bought the stock.
· Current Price: $183
· Limit/Stop Price: $170
· Future Price (Drops to $165): You placed a Stop Sell at $170. The price dropped to $165, so your order was triggered at $170 and you sold the stock.
· Future Price (Rises to $210): You placed a Stop Sell at $170, but since the price rose to $210, your stop price was never hit, so no trade occurred.
·       
  Current Price:
  $183
·       
  Limit/Stop Price:
  N/A (Short Sell doesn’t use a limit price)
·       
  Future Price (Drops to
  $165): You placed a Short
  Sell at $183, meaning you borrowed
  stock and sold it immediately, hoping the price would drop. The price then
  dropped to $165.
·       
  Future Price (Rises to
  $210): You placed a Short
  Sell at $183, meaning you borrowed
  stock and sold it immediately. The price then rose to $210.
https://www.jufinance.com/game/finviz_short_trading.html
·      
  Step 1: Go to finviz.com and click on “Screener”.
·      
  Step 2: Find Top Gainers
In
  the **Screener**, choose **"Signal" = Top Gainers** to filter for stocks that have
  risen the most. 
·      
  Step 3: Use RSI to Find Overbought Stocks
Set
  **RSI (14)** to **Overbought (70)** to find
  stocks that are likely to fall.
·      
  Step 4: Identify Resistance Levels
·      
  Step 5: Place the Short Trade
Short
  the stock when it starts falling from the resistance point.
·      
  Step 6: Set Stop Loss and Target
Set
  a **Stop Loss** just
  above the resistance level and aim for a 1-2% price drop as your target.
Explanation:
·      
  You **short at $49** (selling borrowed
  shares), expecting the price to fall.
·      
  But if the stock rises to $51, your **Stop
  Loss** will trigger, and you’ll buy back the stock at **$51**, taking a **$2
  loss per share**.
·      
  For example, if you shorted 10 shares,
  your total loss would be $2 × 10 = **$20**.
·      
  Note: A **Stop Loss** protects you from
  losing more as the stock rises further. Without it, your losses could be
  unlimited if the stock price keeps rising.
Note:
  Trading volume needs to be high as well.
  While RSI might signal a potential short opportunity, combining it with high
  trading volume can improve the timing of your trades.
Summary
 
In class Exercise, Quiz, and
  game: https://www.jufinance.com/game/order_type_exercise.html
Homework: 
Which type of order strategy would maximize profits when
  trading NVIDIA stock in the current market conditions, and why?

2 Refer to this clip (Rich Dork Loses 6.8 Billion Dollars Because of Reddit | Dumb Money | CLIP) and explain how the short squeeze occurred.
Visit to the Federal Reserve Jacksonville Branch (
  counted as a CEO event)
Date: September 24th
  Time: 1:30 PM - 2:30 PM
  Location: 800 Water Street
  Dress Code: Business Casual

Part II: Call and Put
  Options    Game     Quiz    Self-produced
  Video 
 Understanding Call and Put Option Payoff:
payoff = max(0, strike - price)
Put
  Options (Investopedia, https://www.investopedia.com/terms/p/putoption.asp)
·       
  Definition: A
  put option gives the buyer the right, but not the obligation, to sell a stock
  at a predetermined price (strike price) within a set timeframe.
·       
  Key Features:
·       
  Why buy a put option?:
  It allows traders to profit from a stock's decline or to hedge against
  potential losses.
Homework 1 (Optional): Play Call and Put
  Option Games at https://www.jufinance.com/game/
Explore and understand call and put options by playing
  through various simulation games from basic to advanced levels. These
  simulations cover strategies like covered calls, protective puts, and
  spreads. Try the following levels:
3.    Advanced
  Level:
Optional Task:
  Try to find free websites or simulators that offer these option trading games
  to practice.
Homework 2 (Optional):   

Create
  trading strategies using short selling and options trading based on Nvidia.
  For additional ideas, you can explore the interactive game available at www.jufinance.com/fin310_24f/nvidia.html
Call options: Learn the basics of buying and selling
By James
  Royal, 11/1/2021
https://www.bankrate.com/investing/what-are-call-options-learn-basics-buying-selling
Call options are a type of option that increases
  in value when a stock rises. They’re the best-known kind of
  option, and they allow the owner to lock in a price to buy a specific stock
  by a specific date. Call options are appealing because they can appreciate
  quickly on a small move up in the stock price. So that makes them a favorite
  with traders who are looking for a big gain.
What is a call option?
A call option gives you the right, but not the
  requirement, to purchase a stock at a specific price (known as the strike
  price) by a specific date, at the option’s expiration. For this
  right, the call buyer will pay an amount of money called a premium, which the
  call seller will receive. Unlike stocks, which can live in perpetuity, an
  option will cease to exist after expiration, ending up either worthless or
  with some value.
The following components comprise the major traits
  of an option:
Strike price: The price at which you can buy the underlying
  stock
Premium: The price of the option, for either buyer or
  seller
Expiration: When the option expires and is settled
One option is
  called a contract, and each contract represents 100 shares of the underlying
  stock. Exchanges
  quote options prices in terms of the per-share price, not the total price you
  must pay to own the contract. For example, an option may be quoted at $0.75
  on the exchange. So to purchase one contract it will cost (100 shares * 1
  contract * $0.75), or $75.
How a call option works
Call options
  are “in the money” when the stock
  price is above the strike price at expiration. The call owner can exercise
  the option, putting up cash to buy the stock at the strike price. Or the
  owner can simply sell the option at its fair market value to another buyer
  before it expires.
A call owner profits when the premium paid is less
  than the difference between the stock price and the strike price. For example,
  imagine a trader bought a call for $0.50 with a strike price of $20, and the
  stock is $23 at expiration. The option is worth $3 (the $23 stock price minus
  the $20 strike price) and the trader has made a profit of $2.50 ($3 minus the
  cost of $0.50).
If the stock
  price is below the strike price at expiration, then the call is “out of the
  money” and expires worthless. The call seller keeps any premium received for
  the option.
Why buy a call option?
The biggest advantage of buying a call option is
  that it magnifies the gains in a stock’s price. For a
  relatively small upfront cost, you can enjoy a stock’s gains above the strike
  price until the option expires. So if you’re buying a call, you usually
  expect the stock to rise before expiration.
Call options vs. put options
The other
  major kind of option is called a put
  option, and its value increases as the stock price goes down. So traders
  can wager on a stock’s decline by buying put options. In this sense, puts act
  like the opposite of call options, though they have many similar risks and
  rewards:
Like buying a
  call option, buying a put option
  allows you the opportunity to earn back many times your investment.
Like buying a
  call option, the risk of buying a put option is that you could lose all your
  investment if the put expires worthless.
Like selling a
  call option, selling a put option earns a premium, but then the seller takes
  on all the risks if the stock moves in an unfavorable direction.
Unlike selling
  a call option, selling a put option exposes you to capped losses (since a
  stock cannot fall below $0). Still, you could lose many times more money than
  the premium received.
What Is a Put Option?
A put option (or “put”) is a contract giving the
  option buyer the right, but not the obligation, to sell—or sell short—a
  specified amount of an underlying security at a predetermined price within a
  specified time frame. This predetermined price at which the
  buyer of the put option can sell the underlying security is called the strike
  price.
Put options are
  traded on various underlying assets, including stocks, currencies, bonds,
  commodities, futures, and indexes. A put option can be contrasted with a call
  option, which gives the holder the right to buy the underlying security at a
  specified price, either on or before the expiration date of the option
  contract.
KEY TAKEAWAYS
· Put options give holders of the option the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time frame.
· Put options are available on a wide range of assets, including stocks, indexes, commodities, and currencies.
· Put option prices are impacted by changes in the price of the underlying asset, the option strike price, time decay, interest rates, and volatility.
· Put options increase in value as the underlying asset falls in price, as volatility of the underlying asset price increases, and as interest rates decline.
· Put options lose value as the underlying asset increases in price, as volatility of the underlying asset price decreases, as interest rates rise, and as the time to expiration nears.
https://www.investopedia.com/terms/p/putoption.asp
 
Part III:
  Diversification    Game1      Game2       Quiz
| Investment Type | Low-Interest-Rate
    Environment | High-Interest-Rate
    Environment | 
| Bonds | ·       
    Long-term bonds are
    attractive because lower rates make them more valuable. Bond prices
    generally rise. | ·       
    Short-term bonds are better as
    they are less sensitive to rate changes. Long-term bonds lose value as
    rates rise. | 
|   | ·       
    Investors seek higher yields from longer durations. | ·       
    Shorter durations and floating-rate bonds offer protection
    from rising rates. | 
| Dividend Stocks | ·       
    Dividend stocks (like
    utilities or consumer staples) are favored because bond yields are low,
    making dividends more attractive. | ·       
    Dividend stocks still
    provide income, but sectors like utilities may struggle as borrowing costs
    increase. | 
|   | ·       
    Investors are drawn to reliable cash flows in a low-yield
    environment. | ·       
    Dividends from stable companies (consumer staples) can still
    offer reliable returns. | 
| Growth Stocks | ·       
    Growth stocks (like tech)
    flourish as borrowing is cheap, allowing companies to expand and invest in
    future growth. | ·       
    Growth stocks suffer as
    higher rates make borrowing expensive, reducing the value of future
    earnings. | 
|   | ·       
    Companies that promise high future returns do well when
    borrowing is inexpensive. | ·       
    Rising rates reduce the present value of future cash flows,
    making growth stocks less attractive. | 
| Real Estate | ·       
    Real estate benefits as
    low rates reduce borrowing costs for mortgages and property investment. | ·       
    Real estate is hit as higher
    mortgage rates reduce demand, but rental income from commercial properties
    (REITs) can still provide stable returns. | 
|   | ·       
    Real estate tends to boom when borrowing is cheap, leading to
    higher property values. | ·       
    Higher borrowing costs limit property purchases, but some
    REITs may still thrive by generating steady rental income. | 
| Commodities & Gold | ·       
    Commodities and gold don’t
    typically perform as well, as inflation is often lower in a low-rate
    environment. | ·       
    Commodities like oil and
    gold tend to do better as they hedge against inflation and uncertainty
    caused by high rates. | 
|   | ·       
    Low interest reduces the appeal of commodities as a hedge, and
    inflation tends to be under control. | ·       
    Higher inflation and uncertainty push investors towards
    commodities like gold, oil, and other tangible assets. | 
| Cash & Cash Equivalents | ·       
    Cash and equivalents (like money
    market funds or CDs) yield very little due to low rates, making them
    unattractive for returns. | ·       
    Cash equivalents become more
    attractive as they offer higher returns in a high-rate environment,
    providing liquidity and security. | 
|   | ·       
    Investors tend to avoid cash during low rates, seeking
    higher-yielding assets. | ·       
    Cash provides safety and earns better interest during high
    rates, making it a useful part of a diversified portfolio. | 
| Sector Diversification | ·       
    Tech and growth sectors do well,
    benefiting from low borrowing costs and high potential future earnings. | ·       
    Financials perform well as banks can charge higher
    interest on loans, and consumer staples provide stability during
    uncertainty. | 
|   | ·       
    Borrowing is cheap, so sectors like tech, healthcare, and
    consumer discretionary thrive. | ·       
    Higher rates allow financial institutions to increase margins,
    while consumer staples remain in demand despite the economy. | 
| Real Estate Investment Trusts (REITs) | ·       
    REITs benefit from low borrowing costs, making it
    easier to invest in real estate, leading to rising property values. | ·       
    REITs that focus on rental income properties
    (like apartments or commercial spaces) may still perform well, as they
    generate income even as rates rise. | 
|   | ·       
    Lower interest makes property development and mortgages more
    affordable, boosting the real estate sector. | ·       
    Higher rates reduce property affordability, but REITs that
    focus on rental properties can still provide steady cash flow. | 

Stock  returns from 1995-2015 - Apple and
  S&P 500



“Members of a Yale class entering their prime giving years had
  decided to set up a private fund, manage the money themselves, and give it to
  the University 25 years later. The worrisome part for Yale was that it would
  have no control over the fund, which was going to be invested in high-risk
  securities. What if all the money was blown by these “amateurs"?
  And what if the scheme siphoned off other potential donations?
Happily, everything turned out for the best. Despite Yale’s initial efforts to discourage the Class of 1954 from its
  plan, the class persisted. And last October, its leaders announced that their
  original collective investment of $380,000 had grown to $70 million, earning
  unalloyed gratitude from the University and the right to name two new Science
  Hill buildings after their class.” ----- What is your
  opinion? Apple is one of the stocks in their portfolio. So shall you pick
  stocks individually or buy S&P500?
Part IV: S&P500    Quiz
S&P
  500 Companies by Weight
The S&P 500 component weights are
  listed from largest to smallest. Data for each company in the list is updated
  after each trading day. The S&P 500 index consists of most but not all of
  the largest companies in the United States. The S&P market cap is 70 to
  80% of the total US stock market capitalization. It is a commonly
  used benchmark for stock portfolio performance in America and abroad. Beating the performance of the S&P
  with less risk is the goal of nearly every portfolio manager, hedge fund and
  private investor.

List shows the holdings of
  the SPDR S&P 500 ETF Trust (SPY). 9/24/2024
| 
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| 
 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
https://www.slickcharts.com/sp500
| Company | 2020 | 2021 | 2022 | 2023 | 2024 | 
| Apple Inc. (AAPL)(%) | 6.5 | 6.8 | 6.9 | 7 | 7.12 | 
| Microsoft Corp. (MSFT)(%) | 5 | 5.1 | 5.3 | 6 | 6.49 | 
| Amazon.com Inc. (AMZN)(%) | 3.8 | 3.9 | 3.95 | 3.1 | 3.21 | 
| Meta Platforms Inc.
    (META)(%) | 2.5 | 2.6 | 2.75 | 2.8 | 1.73 | 
| Alphabet Inc. (GOOGL)(%) | 2 | 2.05 | 2.15 | 3.8 | 3.92 | 
| Berkshire Hathaway
    (BRK.B)(%) | 1.75 | 1.77 | 1.79 | 1.7 | 1.71 | 
| NVIDIA (NVDA)(%) | 1.5 | 2.1 | 2.3 | 3 | 3.18 | 
http://siblisresearch.com/data/weights-sp-500-companies/

This graph shows the changes in the influence (weight) of
  top S&P 500 companies over the past five years. Each line represents a
  company's weight in the index, and how their importance has shifted during
  that period:


https://www.statmuse.com/money/ask/worst-performing-stocks-in-the-sandp-500-in-2024
1.    
  S&P 500 Company
  Growth (2014-2024):
2.    
  S&P 500 Company
  Negative Returns (2024):
In
  essence, diversification remains a crucial strategy,
  allowing us to manage risk while aiming for steady, long-term growth.
~ FYI only: SPXL, UPRO, SPXS ~ Quiz
| Aspect | S&P 500 | S&P 500 3x ETF:  SPXL, UPRO, SPXS | 
| Composition | 500 large U.S. companies | Uses financial tools to enhance the impact of changes in 500
    large U.S. companies’ stock prices. | 
| Risk Level | Relatively low, stable over time | High risk, daily magnified by 3x | 
| Potential Reward | 7-10% annual returns on average | Potentially 3 times daily return of S&P 500 | 
| Volatility | Moderate | Very High, swings are 3x larger | 
| Best Use Case | Long-term investors seeking steady growth | Short-term traders looking for fast gains | 
| Example of Right Bet | 5% gain in a year -> 5% return | 5% gain in a day -> 15% return | 
| Example of Wrong Bet | 5% drop in a year -> 5% loss | 5% drop in a day -> 15% loss | 
To find S&P 500 3x ETFs and compare them with regular S&P 500 funds, here are a few websites that provide detailed information, performance tracking, and comparisons:
| Website | Features | Key Functions | 
| Yahoo Finance | Search for ETFs by ticker (e.g., SPXL, UPRO, SPXS). Provides detailed stock charts,
    historical data, and comparison tools. | Real-time data, user-friendly interface, customizable charts
    and comparisons. | 
| ETF.com | Search for S&P 500 ETFs and leveraged ETFs. Offers
    insights into fund composition, expense ratios, and performance. | Fund screener, expense ratio comparison, fund-specific
    insights and risks. | 
| Morningstar.com | Search for S&P 500 ETFs. Compare historical performance,
    ratings, risk assessments. Detailed analysis for regular and leveraged
    ETFs. | Extensive research tools, risk rating system, in-depth fund
    analysis with user-friendly data export. | 
·  SPXL (Direxion Daily S&P 500 Bull 3X
  Shares):
·  UPRO (ProShares UltraPro S&P 500):
·  SPXS (Direxion Daily S&P 500 Bear 3X
  Shares):
What Is
  the Weighting of the S&P 500? --- Understanding the Sectors and Market Caps
  in the Index
 BY TIM LEMKE
REVIEWED
  BY DORETHA CLEMON on June 18, 2021
https://www.thebalance.com/what-is-the-sector-weighting-of-the-s-and-p-500-4579847
If
  you’ve ever dipped so much as a toe into investing, you’ve probably heard
  about the Standard & Poor’s 500 Index.
The S&P 500 is the most
  common index used to track the performance of the U.S. stock market.
  It is based on the stock prices of 500
  of the largest companies that trade on the New York Stock Exchange or the
  NASDAQ.
The
  S&P 500 is often hailed as a representation of the entire U.S. stock
  market and American business as a whole, but that is not entirely accurate.
  While it does give you exposure to a broad swath of the economy, it is heavily weighted toward specific
  market capitalizations, sectors, and industries, which is important to know
  if you are seeking to build a diversified equity portfolio.
S&P 500 Market
  Capitalizations
By
  design, the S&P 500 includes only
  large companies. Only the biggest companies with massive market
  capitalizations ($9.8 billion or more) are included-think of large firms
  such as Apple, Microsoft, Amazon.com, Facebook, and Alphabet, the parent
  company of Google. One could argue that the S&P 500 is 100% weighted
  toward large-cap firms, though many of the biggest firms would technically be
  considered mega-cap.
It's
  important for investors to know that while investing in the S&P 500 can
  give great returns, they may be missing out on returns from
  medium-sized and small companies. Those who are looking for exposure to
  smaller firms should consider investments that track the S&P 400, consisting of the top mid-cap companies, or the Russell
  2000, which features mostly smaller companies.
Those
  who are looking for exposure to smaller firms should consider investments
  that track the S&P 400, consisting of the top mid-cap companies, or the
  Russell 2000, which features mostly smaller companies.
S&P
  500 Sector and Industry Weighting
Any
  attempt to diversify your stock portfolio should include some attempt at
  diversification according to sector and industry. In fact, some investment
  strategies suggest a perfect balance of sectors, because any sector can be
  the best-performing group in any given year.
In
  recent years, certain sectors and industries have performed better than
  others, and that is now reflected in the makeup of the S&P 500. It also
  means that many sectors won't be as represented in the index.
As
  of December 22, 2020, the breakdown of sectors in the S&P 500
  was as follows, according to State Street Advisors (the creator of the SPDR
  S&P 500 ETF Trust, an exchange-traded fund that seeks to track the
  performance of the S&P 500):
Information technology:
  27.60%
Health care: 13.44%
Consumer discretionary:
  12.70%
Communication services:
  10.79%
Financials: 10.34%
Industrials:
  8.47%
Consumer
  staples: 6.55%
Utilities:
  2.73%
Materials:
  2.64%
Real
  estate: 2.41%
Energy:
  2.33%
As
  you can see, the S&P is
  heavily weighted toward tech, health care, and consumer discretionary stocks.
  Meanwhile, there aren't as many
  utilities, real estate companies, or firms involved in producing and selling
  raw materials.
This weighting has changed
  greatly over the years. Look back 25 years, and you’ll likely see far fewer
  tech companies and more emphasis on consumer discretionary and communications
  companies. Go back 50 years, and the mix will look even more different.
Why
  It Matters
The weighting of the S&P
  500 should be important to you, because the index is not always a
  representation of the types of companies performing the best in any given
  year. For example, while consumer discretionary
  may have been the top-performing sector in 2015, it ranked third in 2017 and
  seventh in 2019. The communications services sector was last in performance
  in 2017 but had ranked second just one year earlier. The financials sector
  was dead last in 2007 and 2008, in the midst of the financial crisis, but it
  claimed the top spot in 2012 and performed third-best in 2019.4
Predicting which sectors
  will perform best in any given year is very difficult, which is why
  diversification is key.
How To Supplement the S&P
  500
Investing
  in the S&P 500 through a low-cost index fund can provide a very strong
  base for most stock portfolios. But to get broad diversification among market
  caps and sectors, it may help to expand your reach.
Fortunately, there are
  mutual funds and exchange-traded funds (ETFs) that provide exposure to
  whatever you may be seeking. An investor who is looking to boost their
  portfolio by purchasing small-cap stocks can buy shares of an index fund
  designed to mirror the Russell 2000. If you want to invest more in financial
  stocks, you can access funds comprising a wide range of banks and financial
  services firms.
There are also mutual funds
  and ETFs that offer broad exposure to the entire stock market, including all
  market caps and sectors. Vanguard’s Total Stock Market ETF and the S&P
  Total Stock Market ETF from iShares are two popular examples.
Part V: Mutual Funds and
  ETF (SPY, QQQ)    Game     Quiz
Want to improve your personal finances? Start by taking this
  quiz to get an idea of your investment risk tolerance – one of the
  fundamental issues to consider when planning your investment strategy, either
  alone or in consultation with a financial
  services professional. 
 Investment
  risk tolerant test:  https://jufinance.com/risk_tolerance.html
Example: Optimally diversified portfolio
1.            
3.      
| Stock Category | Description | Example Stocks | Investor Type | Risk Level | Reward Potential | 
| U.S. Large Market (Large-Cap) | Large companies with market capitalization over $10 billion. | Apple (AAPL), Microsoft (MSFT), Johnson & Johnson (JNJ) | Conservative to Moderate; looking for stability and long-term
    growth | Low to Moderate Risk | Stable returns with moderate growth | 
| U.S. Large Value | Large-cap companies considered undervalued, often paying
    dividends. | Berkshire Hathaway (BRK.B), JPMorgan Chase (JPM), Procter
    & Gamble (PG) | Conservative; seeking dividends and undervalued opportunities | Moderate Risk | Moderate returns with dividends and value growth | 
| U.S. Mid Cap Market | Mid-sized companies with market capitalization between $2
    billion and $10 billion. | First Solar (FSLR), Zebra Technologies (ZBRA), Bio-Techne
    (TECH) | Moderate; seeking growth with a balance of risk | Moderate Risk | Higher growth potential than large caps, moderate volatility | 
| U.S. Mid Value | Mid-cap companies considered undervalued, often paying
    moderate dividends. | Masco Corporation (MAS), Eastman Chemical (EMN), Targa
    Resources (TRGP) | Moderate; looking for growth in undervalued, mid-sized
    companies | Moderate Risk | Potential for moderate growth with some income from dividends | 
| U.S. Small Cap Market (Small-Cap) | Small companies with market capitalization between $300
    million and $2 billion. | AMC Entertainment (AMC), Tupperware Brands (TUP), TrueCar
    (TRUE) | Aggressive; seeking higher growth potential in smaller
    companies | High Risk | High growth potential, but very volatile | 
| U.S. Small Value | Small-cap companies considered undervalued or have lower
    price-to-earnings ratios. |  Tutor Perini (TPC),
    G-III Apparel Group (GIII) | Aggressive; seeking value in smaller, underpriced companies | High Risk | High potential rewards, but very volatile | 
 Exchange traded funds (ETFs) (Khan academy) 
 
Examples of ETF: Powershares (QQQ) – NASDAQ 100 Index (Large-cap
  growth stocks)

 
 
Average Volume: 36.1 million
Step-by-Step
  Filters for the screener:
After
  you run the screen, a list of funds will appear. Here's how to interpret the
  most important columns:
Now,
  click Search, and the results
  will show a list of funds that match this criteria.
After
  the search, click on a fund’s name for more detailed information. You’ll see details like:
·       
  Start
  Simple: Focus on categories and ratings to avoid
  getting overwhelmed by too many options.
·       
  Expense
  Ratio: Always look at the fees! They can
  significantly impact long-term returns.
·       
  Performance:
  A fund’s historical performance isn’t a guarantee of future returns, but it’s
  a useful indicator.
 
HW    (Due with the second mid-term exam)
1.    
  Work on this investment risk
  tolerance test (https://jufinance.com/risk_tolerance.html)
  and report your score. Make a self-evaluation about yourself in terms of your
  risk tolerance level. Based on your risk level, set up a investment strategy!
  Please provide a rationale.
2.    
  Compare ETF with mutual fund
3.    
  Compare QQQ with SPY
4.
  Visit https://finra-markets.morningstar.com/MutualFund/AdvScreener/Screen.jsp.
  Based on group exercise, write a brief explanation (a few
  sentences) about why your group chose this mutual fund. 
Focus
  on:
·       
  Fund name
  and type (e.g., growth or balanced).
·       
  What is special about this fund?
  (e.g., good performance, low fees, strong rating).
SPY vs. QQQ: Which ETF Wins in 2022?
Since the
  bull-market friendly QQQ has beat SPY more often than not over the last 20 years,
  it should never be counted out.
By MarketBeat
  Staff, September 6, 2022
 https://www.entrepreneur.com/finance/spy-vs-qqq-which-etf-wins-in-2022/434753
Barring a
  miraculous late year run, the major indices will finish in the red for the
  first time since 2018. That means the ETFs that track them, will drag down
  many investment account values after three years of double-digit gains.
Over the next
  four months, two of the most popular ETFs, the SPDR S&P 500 ETF Trust
  (NYSEARCA:SPY) and the Invesco QQQ Trust (NASDAQ:QQQ) will be battling it out
  for the dubious honor of 2022 ‘winner’. Together the funds hold more than
  $500 billion in investor assets.
Last year’s race
  came down to the wire with SPY sticking its nose out for a 28.7% to 27.4%
  victory. It ended a four-year winning streak for QQQ including 2020’s 48.4%
  to 18.3% drubbing.
  
Despite their
  potential to produce dramatically different returns, SPY and QQQ do have a
  lot in common. Since 2000, the correlation of their annual returns is a
  remarkably high 0.92. That makes sense considering more than three-fourths of
  QQQ’s holdings are also in SPY—and the top holdings are very similar.
Yet there also
  some subtle differences that can account for major performance disparities.
  It is these differences that will
  determine if SPY (down 17.4% year-to-date) holds its lead on QQQ (down 25.8%)
  and notch its first back-to-back title since 2005-2006.
#1 Risk-On or Risk-Off?
If the economy
  fends off recessionary pressures and inflation shows signs of cooling this
  would likely be a welcomed development for equity investors. In turn, a less
  hawkish Fed would be icing on the cake. This
  could lead to improved consumer confidence and market sentiment. The opposite scenario of persistent
  inflation, deep recession, and aggressive Fed policy could make things worse.
In the bullish case, stocks would return to
  “risk-on” mode. The advantage would go to QQQ. Why? The Nasdaq-100 index
  tends to do better when markets head higher. This reflects the higher risk
  nature of its components and its 1.29 beta relative to the broad U.S. market.
  Under the bearish scenario, the less risky S&P 500 tracked by the SPY
  would probably outperform.
#2 Sector
  Performance
We often hear
  the Nasdaq called the ‘tech-heavy’
  index and indeed it is. Almost
  half of its weight is in the technology sector. In the S&P 500,
  technology names account for around one-fourth of the benchmark.
In both cases technology is the largest sector
  weighting, but it is the double weighting in QQQ that accounts
  for much of its day-to-day return differences with SPY. Tech has been the worst performing sector so far this year and a big
  reason why QQQ is lagging. More of the same would all but clinch a W for
  SPY, while a fourth quarter tech rally is QQQ’s best hope for a dramatic
  comeback win.
The energy
  sector could also be a factor. By far the best performing economic group
  year-to-date, even SPY’s 4% energy
  weighting could contribute to outperformance. There are no energy names in QQQ.
Then there are financials. They are the third
  largest sector in SPY at a 13% weighting but represent less than 1% of QQQ.
  Strong bank earnings reports boosted by higher interest rates could really
  help SPY distance itself from QQQ.
#3 Big Stock
  Influencers
At the
  individual stock level, SPY and QQQ appear to be close cousins when comparing
  their respective top holdings. In fact, the top five are
  identical—Apple, Microsoft, Amazon, Tesla, and Alphabet. What isn’t identical though is how much
  the big five are weighted in each fund. They command more than 40% of the QQQ
  portfolio. In SPY their combined weighting is a more diluted 22%.
This means
  that the relative weighting of these lead horses can create some major return
  differences. Apple is the prime
  example. It has a 13.7% weight in QQQ and a 7.3% weight in SPY, a
  difference of 6.4%. So, when Apple shares outperform the S&P 500, the
  Nasdaq, and thereby QQQ, has a good chance to outperform.
The same goes
  for stocks like Microsoft, Amazon, and Tesla which have significantly larger
  weights in QQQ. Unfortunately for QQQ investors, all three have
  underperformed SPY year-to-date offsetting Apple’s modest outperformance.
Putting weights aside, 62 of QQQ’s 102 holdings
  are lagging SPY year-to-date. This in addition to the risk-off trade, tough
  year for tech, and certain mega cap underperformers has made it virtually
  impossible for QQQ to gain ground on SPY.
A summer run
  did help QQQ briefly close the gap on SPY before Fed Chairman Powell’s
  hawkish tone relinquished about half of its gains. Since the bull-market friendly QQQ has beat SPY more often than not
  over the last 20 years, it should never be counted out. But a lot will have
  to fall into place for the tech-dominated fund to win in 2022.
ETF Battles: QQQ Vs. SPY,
  Who Wins?
https://seekingalpha.com/instablog/18416022-etfguide/5418872-etf-battles-qqq-vs-spy-who-wins
Mar. 10, 2020
  7:38 PM ETInvesco QQQ ETF (QQQ), SPY
This is an
  excerpt from the video titled, ETF Battles: QQQ vs. SPY with Ron DeLegge at
  ETF guide. 
During normal
  markets, daily trading volume for QQQ averages around 75 million shares
  while SPY averages 173 million shares. 
During the
  latest market correction, daily volume skyrocketed to record levels with QQQ
  topping 149,247,100 shares traded in a single session while SPY booked
  385,764,000 shares. (Both trading volume peaks occurred on Feb. 28, 2020)
  
Cost
The first
  category for comparing QQQ vs. SPY is cost. Who wins? SPY charges annual
  expenses of just 0.09% compared to 0.20% for QQQ. Put another way, QQQ is
  more than double the cost of SPY! While SPY isn't necessarily the cheapest
  S&P 500 ETF, compared to QQQ it's a bargain. Bid ask spreads are another
  element of an ETF costs. And ETFs with tight bid ask spreads reduce the
  frictional trading costs associated with buying and selling funds. In this
  regard, QQQ and SPY are evenly matched with both funds having very narrow
  bid ask spreads that hover around 0.01%.
Dividends
First, both
  funds distribute dividends from their equity holdings every quarter. SPY
  has a 12-month trailing yield of 1.90% while QQQ is at 0.77%. Clearly,
  SPY wins but there's more behind the reason why. SPY, unlike QQQ, contains
  significant exposure to key dividend paying industry sectors like financials,
  real estate, and utilities. On the other hand, QQQ is overweight technology
  (63.91% of its portfolio is committed to this sector at the time of
  publication) and the tech sector is a historically low dividend yielding
  industry group. SPY beats QQQ by having a higher dividend. Also the fact
  that SPY obtains its dividends across a far more diversified base of 11
  industry groups compared to the technology heavy QQQ makes it a winner. 
Diversification
  
Almost 65%
  of QQQ's sector exposure is to technology companies, which isn't very
  diversified at all and if you blindfolded me and asked me to guess what type
  of ETF that QQQ is, I would immediately describe it as an industry sector
  fund. In contrast, SPY beats QQQ on diversification because not only does
  it have more stocks - 500 - but the stocks it owns are scattered across 11
  different industry groups which include technology along with a whole
  bunch of other important industry sectors like healthcare, materials, and
  industrials. 
Performance
Excluding
  dividends, QQQ has gained around 20% over the past year while SPY has
  gained around 7%. So QQQ wins the short-term performance race.
  What about longer time frames? QQQ outperformed SPY over the past 10 and 15
  year period too. But if we go back 20 years, SPY wins because it gained
  around 197% not including dividends while QQQ gained just 101%. At the end of
  the day, QQQ's lights out performance during the past 1, 10, and 15 years is
  largely due to its concentrated portfolio in technology. SPY's less concentrated
  exposure to tech during this time frame resulted in a lower return.
  Nevertheless, over 20 years SPY did manage to outperform  QQQ by a not so small 96%. This is a
  split decision with QQQ winning the shorter term performance race while SPY
  wins the longer-term race.
Final Winner
  of ETF Battles
Who wins the
  ETF battle between QQQ vs. SPY? The final winner of today's hard fought
  battle between QQQ and SPY is...the SPDR S&P 500 ETF (SPY). It's got
  lower cost, better diversification, a higher dividend yield, and better
  long-term performance.
How to tell the performance of a
  fund?
Alpha, often considered the
  active return on an investment, gauges the performance of an investment against
  a market index used as a benchmark, since they are often considered to represent the market’s movement as a whole. The
  excess returns of a fund relative to the return of a
  benchmark index is the fund's alpha.
Alpha is most often used for
  mutual funds and other similar investment types. It is often represented as a single number (like 3 or -5), but
  this refers to a percentage measuring how the portfolio or fund
  performed compared to the benchmark index (i.e. 3% better or 5% worse).
Alpha is often used with beta,
  which measures volatility or risk, and is also often referred to as “excess return” or “abnormal rate of return”. (Investorpedia)  
Value or Growth Stocks: Which Is Better?
By MARK P. CUSSEN Updated March 18, 2022, Reviewed by MARGUERITA
  CHENG, Fact checked by RYAN EICHLER
https://www.investopedia.com/articles/professionals/072415/value-or-growth-stocks-which-best.asp
Growth stocks are those companies that are considered to have
  the potential to outperform the overall market over time because of their
  future potential. Value stocks are classified as companies that are currently
  trading below what they are really worth and will thus provide a superior
  return. Which category is better? The
  comparative historical performance of these two sub-sectors yields some
  surprising results.
KEY TAKEAWAYS
·      
  Growth stocks are expected to
  outperform the overall market over time because of their future potential.
·      
  Value stocks are thought to
  trade below what they are really worth.
·      
  The question of whether a growth
  or value stock strategy is better must be evaluated in the context of the
  investor's time horizon and risk.
 
What is Value Investing?
Growth Stocks vs. Value Stocks
The concept of a growth stock versus one that is considered to
  be undervalued generally comes from the fundamental stock analysis.
Growth
Growth stocks are considered by analysts to have the potential
  to outperform either the overall markets or else a specific subsegment of
  them for a period of time.
Growth stocks can be found in small-, mid-, and large-cap
  sectors and can only retain this status until analysts feel that they have
  achieved their potential. Growth companies are considered to have a good
  chance for considerable expansion over the next few years, either because
  they have a product or line of products that are expected to sell well or
  because they appear to be run better than many of their competitors and are
  thus predicted to gain an edge on them in their market.
Value
Value stocks are usually larger, more well-established companies
  that are trading below the price that analysts feel the stock is worth,
  depending upon the financial ratio or benchmark that it is being compared to.
  For example, the book value of
  a company’s stock may be $25 a share, based on the
  number of shares outstanding divided by the company’s
  capitalization. Therefore, if it is trading for $20 a share at the moment,
  then many analysts would consider this to be a good value play.
Stocks can
  become undervalued for many reasons. In some cases, public perception will push the price down, such
  as if a major figure in the company is caught in a personal scandal or the
  company is caught doing something unethical. But if the company’s financials are still relatively solid, then value-seekers
  may see this as an ideal entry point, because they figure that the public
  will soon forget about whatever happened and the price will rise to where it
  should be.
Value stocks will typically trade at a discount to either the
  price to earnings, book value, or cash flow ratios. Of course, neither outlook is always correct, and some stocks
  can be classified as a blend of these two categories, where they are
  considered to be undervalued but also have some potential above and beyond
  this. Morningstar Inc., therefore,
  classifies all of the equities and equity funds that it ranks into either a
  growth, value, or blended category.
Growth vs. Value: Performance
When it comes to comparing the historical performances of the
  two respective sub-sectors of stocks, any
  results that can be seen must be evaluated in terms of time horizon and the
  amount of volatility, and thus risk that was endured in order to achieve
  them.
Value stocks are
  at least theoretically considered to have a lower level of risk and
  volatility associated with them because
  they are usually found among larger,
  more established companies. And
  even if they don’t return to the target price that
  analysts or the investor predict, they may still offer some capital growth,
  and these stocks also often pay dividends as well.
Growth stocks,
  meanwhile, will usually refrain from paying out dividends and will instead
  reinvest retained earnings back into the company to expand. Growth stocks'
  probability of loss for investors can also be greater, particularly if the
  company is unable to keep up with growth expectations.
For example, a company with a highly touted new product may
  indeed see its stock price plummet if the product is a dud or if it has some
  design flaws that keep it from working properly. Growth stocks, in general,
  possess the highest potential reward, as well as risk, for investors.
Studies
Although the above paragraph suggests that growth stocks would
  post the best numbers over longer periods, the opposite has actually been
  true. Many studies point to value
  having outperformed growth style over long-term periods. However, looking at
  more recent data, value did outperform for the first 10 years of the 2000s,
  but growth has outperformed over the last 10 years. Take note that dividends
  likely play a key role in helping value outperform over longer-periods.
Going back to 1926, value has had numerous periods of
  outperformance relative to growth. Again, despite the long-term
  outperformance, growth has reigned supreme over the last decade. With that,
  the S&P 500 is made up of roughly 40% technology stocks. 
What Percent of
  the S&P 500 Is Growth vs. Value?
The S&P 500 is not broken down into growth and value stocks.
  However, the two sectors that are often considered growth are technology and consumer discretionary, which make up 40%
  of the index. Meanwhile, value sectors—financials,
  industrials, energy, and consumer staples—make up
  roughly 29% of the index.
What Is an Example of a Value Stock vs. Growth Stock?
·      
  An example of a value stock would be a bank, such as JPMorgan
  Chase (JPM). While key growth is often found in the technology space, such as
  Google (GOOG). 
Are Growth or
  Value Funds Better for the Long-Term?
·      
  Value has outperformed growth stocks over the longer-term, however,
  growth has been outperforming for the last 10 years.
The Bottom Line
The decision to invest in growth vs. value stocks is ultimately
  left to an individual investor’s preference, as well
  as their personal risk tolerance, investment goals, and time horizon. It
  should be noted that over shorter periods, the performance of either growth
  or value will also depend in large part upon the point in the cycle that the
  market happens to be in.
For example,
  value stocks tend to outperform during bear markets and economic recessions,
  while growth stocks tend to excel during bull markets or periods of economic
  expansion. This factor should, therefore, be taken into account by
  shorter-term investors or those seeking to time the markets.
For example,
  value stocks tend to outperform during bear markets and economic recessions,
  while growth stocks tend to excel during bull markets or periods of economic
  expansion. This factor should, therefore, be taken into account by
  shorter-term investors or those seeking to time the markets.
Part VI: Behavior
  Finance        Quiz
 
Anchoring   Game     Self-produced Video
•       
  Test
  yourself first:
               A stock
  price jumps to $40 from $20 but it suddenly dropped back to $20. Shall you
  buy the stock or not? 
•       
  The
  concept of anchoring draws on the tendency to attach or "anchor"
  our thoughts to a reference point - even though it may have no logical
  relevance to the decision at hand.
•       
  Avoiding  Anchoring
–      
  Be
  especially careful about which figures you use to evaluate a stock's
  potential. 
–      
  Don't
  base decisions on benchmarks
–      
  Evaluate
  each company from a variety of perspectives to derive the truest picture of the
  investment landscape. 
Mental Accounting             Self-produced Video
•       
  Test
  yourself
–      
  Shall
  you payoff your credit card debt or start saving for a vocation?
–      
  How do
  you spend your tax refund? 
•       
  Mental
  Accounting refers to the tendency for people to separate their money into
  separate accounts based on a variety of subjective criteria, like the source
  of the money and intent for each account. 
  
Example:  People
  have a special "money jar" set aside for a vacation while still
  carrying credit card debt.
Confirmation Bias      
  Self-produced video
•       
  Confirmation
  bias: First impression can be hard to shake 
–      
  people
  selectively filter information that supports their opinion 
–      
  People
  ignore the rest opinions. 
–      
  In
  investing, people look for information that supports original idea
•       
  Generate
  faulty decision making because of the bias
Example: investor finds all sorts of green flags about the
  investment (such as growing cash flow or a low debt/equity ratio), while
  glossing over financially disastrous red flags, such as loss of critical
  customers or dwindling markets.
Herding     Game      Self-produced video
–      
  Example:
  Dotcom herd
–      
  The
  tendency for individuals to mimic the actions of a larger group. 
•       
  Social
  pressure of conformity is one of the causes.
–      
  This is
  because most people are very sociable and have a natural desire to be
  accepted by a group
•       
  The
  second reason is the common rationale that a large group could not be wrong.           
–      
  This is
  especially prevalent when an individual has very little experience. 
Overconfidence:
•       
  Confidence
  implies realistically trusting in one's abilities
•       
  Overconfidence
  implies an overly optimistic assessment of one's knowledge or control over a
  situation. 
Disposition effect         
  Game            Self-produced Video
–      
  which is
  the tendency for investors to hold on to losing stocks for too long and sell
  winning stocks too soon. 
»      
  The most
  logical course of action would be to hold on to winning stocks to further
  gains and to sell losing stocks to prevent escalating losses. 
»      
  investors
  are willing to assume a higher level of risk in order to avoid the negative
  utility of a prospective loss. 
»      
  Unfortunately,
  many of the losing stocks never recover, and the losses incurred continued to
  mount .
Avoiding the Disposition Effect 
•       
  When
  you have a choice of thinking of one large gain or a number of smaller gains
  (such as finding $100 versus finding a $50 bill from two places), thinking of
  the latter can maximize the amount of positive utility. 
•       
  When
  you have a choice of thinking of one large loss or a number of smaller losses
  (losing $100 versus losing $50 twice), think of one large loss would create
  less negative utility.
•       
  When
  you can think of one large gain with a smaller loss or a situation where you
  net the two to create a smaller gain ($100 and -$55, versus +$45), you would
  receive more positive utility from the smaller gain. 
•       
  When
  you can think of one large loss with a smaller gain or a smaller loss (-$100
  and +$55, versus -$45), try to separate losses from gains. 
Gambler’s
  fallacy       Game    
  Self-produced Video
–      
  An individual erroneously believes that the onset of a certain
  random event is less likely to happen following an event or a series of
  events. 
Example: 
  Consider a series of 20 coin flips that have all landed with the
  "heads". A person might predict that the next coin flip is more
  likely to land with the "tails“. 
  Slot machines:  Every losing pull will
  bring them that much closer to the jackpot. But that is wrong. All pulls are
  independent.
•       
  Example: 
–      
  You liquidate a position after it has gone up in several days.
  
–      
  You hold on to a stock that has fallen in several days because
  you view further declines as "improbable". 
•       
  Avoiding Gambler's Fallacy
–      
  Investors should base decisions on fundamental or technical analysis
  before determining what will happen.
It is irrational to buy a
  stock because you believe it is likely to reverse.
0:18 Anchoring Bias 1:22 Availability Bias 2:22 Bandwagon Effect 3:09 Choice Supportive Bias 3:50 Confirmation Bias 4:30 Ostrich Bias 5:20 Outcome Bias 6:12 Overconfidence 6:52 Placebo Effect 7:44 Survivorship Bias 8:32 Selective Perception 9:08 Blindspot Bias
 
Homework: (due with the second mid-term
  exam) 
1. Gambler's Fallacy
If you were investing in a stock that
  had been declining for several days, would you believe that a rebound is more
  likely because the stock "must" recover soon? Why or why not?
 
2. Mental Accounting
If you receive $500 as a gift, how
  might you treat this money differently than your regular income? What are the
  consequences of this behavior?
 
3. Disposition Effect
Why might investors hold onto losing
  stocks longer than they should? What psychological factors contribute to this
  behavior? 
4.      Which bias do you think affects you the most
  in your personal finances, and why? Give an example of how it has impacted
  your decision-making.
How can you avoid these biases in the
  future when making investment or financial decisions? Provide specific
  strategies you could implement to counteract these biases.
Chapter 6 Bond Market
 
 
 
1.      Cash flow
  of bonds

The above graph shows the cash flow of
  a five year 5% coupon bond. The bond has a duration of 4.49 years.
In
  the image:
If
  the bond has a duration of 4.49 years,
  this means that the average time to receive the bond's payments (weighted by
  their value) is about 4.49 years. This also means that for every 1% increase
  in interest rates, the bond's price would drop by approximately 4.49%. 
In
  Excel: to get duration, use duration function, such as “=DURATION(DATE(2024, 10, 17),
  DATE(2029, 10, 17), 5%, 5%, 2, 1)=4.49”
Or
  visit https://www.jufinance.com/bond_chatgpt/
  to get both duration and convexity (FYI only). 
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Watch this video, How Bonds Work (video)
·       All types of bonds: https://www.finra.org/finra-data/fixed-income
·       Treasury Bond Auction and Market information
http://www.treasurydirect.gov/
Are bonds
  Risky?                   Self-produced
  video               Quiz  
 
Bond risk – credit risk (video)
 
 
| Bond Type | Risk | Return | Potential Investors | Website for Info | 
| Government Bonds | Low (for developed countries) | Low | Conservative, risk-averse investors | https://www.treasurydirect.gov | 
| Corporate Bonds | Moderate to High | Moderate to High | Investors seeking higher returns | https://www.finra.org | 
| Convertible Bonds | Moderate to High | Moderate with potential for high (if stock rises) | Investors willing to take risk for potential stock upside | https://www.investopedia.com | 
| Zero-coupon Bonds | Moderate | Moderate | Investors seeking tax advantages or fixed returns | https://www.investor.gov | 
| Floating-rate Bonds | Moderate | Variable (depends on rates) | Investors seeking protection against interest rate changes | https://www.investopedia.com | 
| Callable Bonds | Moderate to High | Moderate (with potential for early redemption) | Investors betting on lower interest rates | https://www.finra.org | 
| Puttable Bonds | Low to Moderate | Low | Conservative investors seeking flexibility | https://www.investopedia.com | 
| Inflation-linked Bonds (TIPs) | Low | Moderate (inflation-adjusted) | Investors seeking protection against inflation | https://www.treasurydirect.gov | 
| Foreign Bonds | Moderate (depends on issuer) | Moderate | Investors seeking international exposure | https://www.investopedia.com | 
| Savings Bonds | Very Low | Low | Individual, conservative investors | https://www.treasurydirect.gov | 
 Junk Bond
  Vs. S&P500
| Year | S&P 500 Return (%) | ICE BofA Junk Bond Return (%) | 
| 2003 | 28.68 | 28.97 | 
| 2004 | 10.88 | 11.15 | 
| 2005 | 4.91 | 2.74 | 
| 2006 | 15.79 | 11.85 | 
| 2007 | 5.49 | 1.87 | 
| 2008 | -37 | -26.39 | 
| 2009 | 26.46 | 58.21 | 
| 2010 | 15.06 | 15.24 | 
| 2011 | 2.11 | 4.98 | 
| 2012 | 16 | 15.58 | 
| 2013 | 32.39 | 7.44 | 
| 2014 | 13.69 | 2.45 | 
| 2015 | 1.38 | -4.64 | 
| 2016 | 11.96 | 17.13 | 
| 2017 | 21.83 | 7.5 | 
| 2018 | -4.38 | -2.27 | 
| 2019 | 31.49 | 14.32 | 
| 2020 | 18.4 | 7 | 
| 2021 | 28.71 | 5.34 | 
| 2022 | -18.11 | -11.22 | 
| 2023 | 26.29 | 6.2 | 

Data source: The blue line represents the S&P 500 returns,
  and the orange line represents the Junk Bond (ICE BofA U.S. High Yield Index)
  returns.
https://fred.stlouisfed.org/series/BAMLH0A0HYM2EY
Thinking About Investing in Junk
  Bonds? Here's a Simple Strategy for You:
Don't
  put all your money into junk bonds. Junk bonds are risky, so just put a small
  part of your money into them—around 5-10%
  of your portfolio. The rest of your money should go into safer investments
  like stocks (especially index funds) that grow well
  over time.
  
Home Work chapter 6 (due with the second mid
  term exam):
1.    
  Compare
  municipal bond, TIPS, corporate bond and Treasury bond in terms of issuers,
  pro and cons (risk).  
2.    
  Do you
  recommend TIPS to your grandparents? Why or why not? Please refer to both
  articles on TIPS posted in this chapter. 
For
  information on TIPS, please refer to https://www.forbes.com/advisor/investing/treasury-inflation-protected-securities-tips/
3.    
  As a bond
  investor, do you plan to invest in junk bond? Why or why not? For information on junk bonds,
  please refer to https://www.investopedia.com/articles/02/052202.asp
 
Treasury
  Inflation Protected Securities (TIPS)
Brian O'Connell, reviewed By Benjamin Curry, May 24, 2022 
https://www.forbes.com/advisor/investing/treasury-inflation-protected-securities-tips/
Treasury
  Inflation Protected Securities (TIPS) are bonds issued by the U.S. government
  that offer protection against inflation, in addition to modest interest
  payments.
“For investors who
  prioritize preserving the purchasing power of their cash, TIPS can help mitigate
  the impact of unexpectedly high inflation,” says
  Wes Crill, head of investment strategists at Dimensional Fund Advisors in
  Austin, Texas.
How Do TIPS
  Work?
TIPS are fixed
  income securities that work similarly to other treasury bonds. When you buy
  TIPS, you’re purchasing debt issued by the U.S.
  government. You get regular interest payments on the par value of the
  securities, and you get your principal back when the TIPS reach maturity.
What’s special is that TIPS include a special mechanism that provides
  inflation protection. Each year, the
  U.S. Treasury adjusts the par value of TIPS based on the Consumer Price Index
  (CPI), a measure of inflation.
This TIPS
  feature helps preserve the purchasing power of your investment. The value of
  ordinary bonds, which typically feature fixed par values, may be eroded over
  time by gains in inflation.
“Indexing the bond’s value to inflation
  helps protect investors from an erosion in purchasing power,”
  says Crill. Regardless of how much prices change over the term of your
  TIPS investment, you maintain the purchasing power of the cash you invested—plus interest payments.
What’s more, interest payments are also adjusted for inflation
  each year. While the interest rate remains constant over the duration of your
  TIPS, the interest payment you receive every six months is based on your TIPS’ current par value, meaning they effectively increase with
  CPI inflation.
Note that deflation will
  reduce the par value of TIPS. It’s a very rare
  phenomenon, but the value and interest payments of your TIPS could be
  adjusted downward to reflect negative CPI rates. That said, you never receive
  less than the original par value of the TIPS upon maturity.
TIPS and Taxes
As with most investments, TIPS
  earnings are subject to taxes, at least on the federal level. Earnings are generally exempt from state
  and local taxes. However, you have to be careful with TIPS because their
  earnings encompass their interest payments and any inflation adjustments that
  increase their par value.
“In any year when the
  principal value of a TIPS bond increases due to the inflation adjustment,
  that gain is considered reportable income for the year, even though the
  investor won’t receive the inflation-adjusted
  principal until the security matures,” says
  Robert Johnson, professor of finance at Heider College of Business at
  Creighton University.
If you don’t plan for this in advance,
  this may create a small unexpected tax burden, as you won’t
  have received the updated par value back yet but are still expected to pay
  income taxes on it.
In the event that deflation occurs, reducing the par value of
  TIPS, you may be able to use it to offset other income gains. You generally
  will only be able to do this if the adjustment exceeds the amount of TIPS
  interest you earned that year. Speak with a tax professional to determine how
  TIPS may affect your taxes.
Advantages of TIPS
For inflation-conscious investors, TIPS have some big
  advantages.
Easy Inflation Insurance
TIPS can provide
  an easy way to engineer an inflation hedge in your portfolio. “This is particularly important for
  more conservative or income-focused investors,” like
  those in retirement often are, says Matt Dmytryszyn, director of investments
  at Telemus, an investment advisory firm in Southfield, Mich.
In high-inflation environments, TIPS performance may greatly
  exceed that of traditional government bonds, whose fixed interest payments
  effectively become smaller over time.
Backed by the
  Full Faith and Credit of Uncle Sam
While many investments may outperform inflation over time, TIPS
  are the only one guaranteed to do this that also have all of the benefits of
  standard Treasury bonds.
“They’re supported by the full faith and
  credit of the U.S. government and are traded in a deep and very liquid
  market,” says Frederick Miller, founder of Sensible
  Financial Planning and Management, LLC, in Waltham, Mass.
In other words, it’s highly unlikely the
  U.S. government will fail to pay you back—that hasn’t happened yet in U.S. history—and,
  should you need to sell your TIPS
  before their term ends, you should be able to do so relatively easily. This
  makes TIPS great low-risk investments.
Disadvantages of TIPS
TIPS aren’t without their disadvantages.
  Here are a few of the risks you might encounter if you invest in TIPS.
Poor performance
  during deflation or low inflation. 
While TIPS have
  an edge over traditional bonds when inflation runs hot, they perform poorly
  when deflation strikes or there is low inflations. That’s
  because deflation or low inflation drags down their par value, shrinking
  interest payments. In these conditions, TIPS fail to keep up with market
  interest rates.
Unpredictable cash flow. 
  Because their payments are dependent on inflation, it’s
  hard to estimate in advance what your income might be. This may not be a
  huge deal if payments end up being more than expected, but during periods of
  lower inflation or deflation, you could end up with less money coming in than
  you need.
Anticipatory taxes.
  
Because you must
  pay income taxes on any increases to par value, you could end up owing “phantom taxes” on money you haven’t actually earned until your TIPS mature. You can combat this by holding your TIPS in tax-advantaged
  retirement accounts.
Liquidity. 
In general, it’s pretty easy to cash out or resell your U.S. Treasuries
  before their maturity date. TIPS don’t trade as much
  as other bonds in secondary markets, which may make it harder to sell yours
  quickly. During periods of unstable
  inflation, you also may end up selling your TIPS at a loss, especially if
  their par value has been adjusted to lower than what you paid.
CPI may not
  match your personal inflation rate. 
TIPS are tied to CPI, and if your spending habits don’t completely align with the averages used to measure CPI,
  inflation adjustments may not compensate you for your spending patterns. “The CPI is a basket of goods and the composition of each
  of our baskets of goods will vary in some way from the composition CPI
  basket,” says Dmytryszyn. TIPS may not keep up with
  your personal rate of inflation.
How to Buy TIPS
You can buy TIPS
  through your online brokerage account or directly from the U.S. Treasury at
  TreasuryDirect.
If you choose to buy TIPS on the secondary market, be sure to compare
  how much the current inflation-adjusted par value differs from the original
  par value. Remember: You are only guaranteed to receive payment up to the
  original face value of a TIPS. If its price is above the issue price, you
  could lose money if deflation drags the par value to less than you paid.
That means you’ll probably only want to buy TIPS on a secondary market if
  the current par value is less than the issued par value. Otherwise, your
  safest bet may be purchasing TIPS directly from the Treasury.
You can also buy
  shares of mutual funds and exchange-traded funds (ETFs) that contain
  diversified mixes of TIPS. While buying into a TIPS fund may make certain aspects of TIPS
  ownership easier, such as allowing you to reinvest earnings or buy odd-dollar
  amounts of shares, keep in mind you’ll be paying
  expense ratio fees, which can negatively impact your returns.
Should You Buy
  TIPS?
If you’re a safety-minded investor who wants some
  government-backed protection against inflation, TIPS can make good sense.
“TIPS matter to Main Street investors because they can help you
  protect your buying power from rising inflation,”
  says Tom Preston, who spent 30 years as a Wall Street trader and is a market
  strategist for Tastytrade, a Chicago-based digital finance and investment
  marketplace. “When inflation increases the price of
  things you need to buy, the extra return from a TIPS can offset that.”
Before buying your TIPS, though, be sure to compare current bond
  yields to expected inflation rates. Because they adjust for inflation, TIPS
  interest rates tend to be much smaller than non-TIPS bonds. For instance, if bonds are yielding 3%,
  inflation is only 2%, and TIPS interest is 0.5%, you would only expect to
  earn the equivalent of 2.5% on your TIPS each year. This could make it an
  inferior choice to the non-TIPS Treasury. Conversely, if non-TIPS bonds were
  only yielding 2%, TIPS would give you an extra half a percent over
  traditional bonds.
According to Raymond James, the average breakeven point has been
  around 2.5% since the mid-1990s, meaning a non-TIPS bond must yield at least
  that much to hypothetically outperform a TIPS.
Everything You Need to Know
  About Junk BondsEverything You Need to Know About Junk Bonds
By THE INVESTOPEDIA TEAM 
  Updated May 17, 2022 Reviewed by CIERRA MURRY
https://www.investopedia.com/articles/02/052202.asp
The term "junk bond" can evoke memories of investment scams
  such as those perpetrated by Ivan Boesky and Michael Milken, the junk-bond
  kings of the 1980s. But if you own a bond fund today, some of this so-called
  junk may have already found its way into your portfolio. And that's not
  necessarily a bad thing.
Here's what you need to know about junk bonds.
Like any bond, a junk
  bond is an investment in debt. A company or a government raises a sum of
  money by issuing IOUs stating the amount it is borrowing (the principal), the
  date it will return your money (maturity date), and the interest rate
  (coupon) it will pay you on the borrowed money. The interest rate is the
  profit the investor will make for lending the money.
KEY TAKEAWAYS
·      
  Junk bonds have a lower credit
  rating than investment-grade bonds, and therefore have to offer higher
  interest rates to attract investors.
·      
  Junk bonds are generally rated
  BB[+] or lower by Standard & Poor's and Ba[1] or lower by Moody's.
·      
  The rating indicates the
  likelihood that the bond issuer will default on the debt.
·      
  A high-yield bond fund is one
  option for an investor interested in junk bonds but wary of picking them
  individually.
Before it is
  issued, every bond is rated by Standard & Poor's or Moody's, the major
  rating agencies that are tasked with determining the financial ability of the
  issuer to repay the debt it is taking on. The ratings range from AAA (the
  best) to D (the company is in default).
The two agencies
  have slightly different labeling conventions. AAA from Standard & Poor's,
  for example, is Aaa from Moody's.
Broadly speaking, all bonds can be placed in one of two
  categories:
Investment-grade
  bonds are issued by low-risk to medium-risk lenders. A bond rating on
  investment-grade debt can range from AAA to BBB. These highly-rated bonds pay
  relatively low interest because their issuers don't have to pay more.
  Investors looking for an absolutely sound place to put their money will buy
  them.
Junk bonds are
  riskier. They will be rated BB or lower by Standard & Poor's and Ba or
  lower by Moody's. These lower-rated bonds pay a higher yield to investors.
  Their buyers are getting a bigger reward for taking a greater risk.
Think of a bond rating as the report card for a company's credit
  rating. Blue-chip firms with solid financials and steady income will get a
  high rating for their bonds. Riskier companies and government bodies with
  rocky financial histories will get a lower rating.
The chart below shows the bond-rating scales from the two major
  rating agencies.

Historically, average yields on junk bonds have been 4% to 6%
  above those for comparable U.S. Treasuries. U.S. bonds are generally
  considered the standard for investment-grade bonds because the nation has
  never defaulted on a debt.
Bond investors
  break down junk bonds into two broad categories:
Fallen angels
  are bonds that were once rated investment grade but have since been reduced
  to junk-bond status because concerns have emerged about the financial health
  of the issuers.
Rising stars are
  the opposite. The companies that issue these bonds are showing financial
  improvement. Their bonds are still junk, but they've been upgraded to a
  higher level of junk and, if all goes well, they could be on their way to
  investment quality.
Who Buys Junk
  Bonds?
The obvious
  caveat is that junk bonds are a high-risk investment. There's a risk that the
  issuer will file for bankruptcy and you'll never get your money back.
There is a market
  for junk bonds, but it is overwhelmingly dominated by institutional investors
  who can hire analysts with knowledge of specialized credit.
This does not mean that junk-bond investing is strictly for the
  wealthy.
The High-Yield
  Bond Fund
For individual
  investors who are interested in junk bonds, investing in a high-yield bond
  fund can make sense.
You're dabbling
  in a higher-risk investment, but you're relying on the skills of professional
  money managers to make the picks.
High-yield bond funds also lower the overall risk to the
  investor by diversifying their portfolios across asset types. The Vanguard
  High-Yield Corporate Fund Investor Shares (VWEHX), for example, keeps 4.5% of
  its money in U.S. bonds and 3% in cash while spreading the rest among bonds
  rated from Baa3 to C. The Fidelity Capital and Income Fund (FAGIX) keeps
  nearly 20% of its money in stocks.
One important note: You need to know how long you can commit
  your cash before you decide to buy a junk bond fund. Many do not allow
  investors to cash out for at least one or two years.
Also, there is a point at which the rewards of junk bonds don't
  justify the risks. You can determine
  this by looking at the yield spread between junk bonds and U.S. Treasuries.
  The yield on junk is historically 4% to 6% above U.S. Treasuries. If you see
  the yield spread shrinking below 4%, it's probably not worth the added risk.
  to invest in junk bonds.
One more thing to look for is the default rate on junk bonds.
  This can be tracked on Moody's website.
One final warning: Junk bonds follow boom and bust cycles, just
  like stocks. In the early 1990s, many bond funds earned upwards of 30% annual
  returns. A flood of defaults can cause these funds to produce stunning
  negative returns.
Chapter 7 Rating, Term structure
Part
  I: Credit Rating Agency       Self-Produced Video         Game              Quiz
The Big Short - Standard and Poors
  scene --- This is how they worked 
1.     Conflict of
  interest?
2.     Who is doing
  the right thing: the lady representing the rating agency, or the Investment
  Banker?
Who are the three Rating Agencies? 
How credit agencies work(video)
| Feature | Moody's | Standard & Poor's (S&P) | Fitch | 
| Rating Scale | Aaa, Aa, A, Baa, Ba, etc. | AAA, AA, A, BBB, BB, etc. | AAA, AA, A, BBB, BB, etc. | 
| Highest Rating | Aaa | AAA | AAA | 
| Lowest Rating | C | D | D | 
| Ownership | Publicly traded (NYSE: MCO) | Owned by S&P Global (NYSE: SPGI) | Jointly owned by Hearst and FIMALAC | 
| Founded | 1909 | 1941 | 1914 | 
| Headquarters | New York City, USA | New York City, USA | New York City, USA | 
| Global Market Share | ~40% | ~40% | ~15% | 
| Primary Focus | Bonds, Corporate debt | Bonds, Corporate debt, Sovereign debt | Bonds, Corporate debt, Sovereign debt | 
| Major Clients | Governments, Corporations | Governments, Corporations | Governments, Corporations | 
| Key Issue | Often accused of conflicts due to being paid by the companies
    they rate | Similar conflict of interest | Similar conflict of interest | 
Rating Conflicts (video) https://www.youtube.com/watch?v=-C5JW4I3nfU
A ratings conflict happens when a credit rating
  agency faces a situation where its interests clash with its duty to provide honest
  ratings. This mainly occurs because:
A major example of this happened before the 2008 financial
  crisis, when many risky mortgage-backed securities were rated as AAA
  (very safe), even though they were actually risky. This misled investors and
  contributed to the financial crash.
How the credits are assigned? The
   Altman Z-Score
·     The
  Altman Z-Score is one popular model used to predict the
  likelihood of a company going bankrupt within two years.

The Altman Z-score is the output of a credit-strength test
  that helps gauge the likelihood of bankruptcy for a publicly traded
  manufacturing company. The Z-score is based on five key financial ratios that
  can be found and calculated from a company's annual 10-K report.
  The calculation used to determine the Altman Z-score is as follows:
where: Zeta(ζ)=The Altman Z-score
·      
  A=Working capital/total assets
·      
  B=Retained earnings/total assets
·      
  C=Earnings before interest and taxes (EBIT)/totalassets
·      
  D=Market value of equity/book value of total liabilities
·      
  E=Sales/total assets
Typically,
  a score below 1.8 indicates that a
  company is likely heading for or is under the weight of bankruptcy.
  Conversely, companies that score above 3 are less likely to experience
  bankruptcy.
·  How Agencies Use It:
·  Influence on Ratings: While the
  Z-Score is a useful tool, credit rating agencies also consider other factors
  such as industry risk, management quality, market conditions, and broader
  economic factors. Therefore, the Z-Score may be one of many inputs in
  determining a company's final rating. It helps agencies gauge how likely a
  company is to default, but the final rating involves a broader analysis.
·      
  How
  to use Z score?
·  
  look for companies with higher Z-Scores if you
  want to invest in safer stocks. A Z-Score under 1.8 could be a red flag for
  risky companies.
Example: https://www.gurufocus.com/term/zscore/AAPL
·  
  X1 (Working Capital /
  Total Assets):
  X1 = (125,435 - 131,624) / 331,612 = -0.0187
·  
  X2 (Retained Earnings / Total Assets):
  X2 = -4,726 / 331,612 = -0.0143
·  
  X3 (EBIT / Total Assets):
  X3 = (120,873 - (-1,002)) / 331,612 = 0.3675
·  
  X4 (Market Value of Equity / Total
  Liabilities):
  X4 = 3,595,474.318 / 264,904 = 13.5727
·  
  X5 (Revenue / Total Assets):
  X5 = 385,603 / 331,612 = 1.1628
·  
  Final Z-Score:
  Z = (1.2 * -0.0187) + (1.4 * -0.0143) + (3.3 * 0.3675) + (0.6 * 13.5727) +
  (1.0 * 1.1628) = 10.48
Income
  Statement:
Balance
  Sheet:
Hint: 
=1.2X1+1.4X2+3.3X3+0.6X4+1.0X5
Where:
  
Homework of
  chapter 7 part I: 
  
Task:
Question 2: What is Z score? Refer to
  the Z scores of American airlines, Jet Blue Airlines, and Delta
  Airlines.  Do you think that Delta
  airline is more likely to default than the other two airlines based on z
  score? Why or why not? 
Hint: search for z scores of the
  three airlines and compare for z scores. 
Sovereign Credit Rating
By JAMES CHEN,
  Reviewed by GORDON SCOTT on August 26, 2020 
  https://www.investopedia.com/terms/s/sovereign-credit-rating.asp
What Is a Sovereign Credit Rating?
A sovereign credit rating is an independent
  assessment of the creditworthiness of a country or sovereign entity.
  Sovereign credit ratings can give investors insights into the level of risk
  associated with investing in the debt of a particular country, including any
  political risk.
At the request
  of the country, a credit rating agency will evaluate its economic and
  political environment to assign it a rating. Obtaining a good sovereign
  credit rating is usually essential for developing countries that want access
  to funding in international bond markets.
KEY TAKEAWAYS
· A sovereign credit rating is an independent assessment of the creditworthiness of a country or sovereign entity.
· Investors use sovereign credit ratings as a way to assess the riskiness of a particular country's bonds.
· Standard & Poor's gives a BBB- or higher rating to countries it considers investment grade, and grades of BB+ or lower are deemed to be speculative or "junk" grade.
· Moody’s considers a Baa3 or higher rating to be of investment grade, and a rating of Ba1 and below is speculative.
Understanding Sovereign Credit Ratings
In addition to
  issuing bonds in external debt markets, another common motivation for
  countries to obtain a sovereign credit rating is to attract foreign direct
  investment (FDI). Many countries seek ratings from the largest and most
  prominent credit rating agencies to encourage investor confidence. Standard & Poor's, Moody's, and Fitch
  Ratings are the three most influential agencies. Other well-known credit
  rating agencies include China Chengxin International Credit Rating Company,
  Dagong Global Credit Rating, DBRS, and Japan Credit Rating Agency (JCR).
  Subdivisions of countries sometimes issue their own sovereign bonds, which
  also require ratings. However, many agencies exclude smaller areas, such as a
  country's regions, provinces, or municipalities.
Investors use sovereign credit ratings as a way to
  assess the riskiness of a particular country's bonds.
Sovereign credit risk, which is reflected in
  sovereign credit ratings, represents the likelihood that a government might
  be unable—or unwilling—to meet its debt obligations in the future. Several key factors come into play in
  deciding how risky it might be to invest in a particular country or region. They include its debt service ratio,
  growth in its domestic money supply, its import ratio, and the variance of
  its export revenue.
Many countries
  faced growing sovereign credit risk after the 2008 financial crisis, stirring
  global discussions about having to bail out entire nations. At the same time,
  some countries accused the credit rating agencies of being too quick to
  downgrade their debt. The agencies were also criticized for following an
  "issuer pays" model, in which nations pay the agencies to rate
  them. These potential conflicts of interest would not occur if investors paid
  for the ratings.
Examples of
  Sovereign Credit Ratings
Standard &
  Poor's gives a BBB- or higher rating to countries it considers investment
  grade, and grades of BB+ or lower are deemed to be speculative or
  "junk" grade. S&P gave Argentina a CCC- grade in 2019, while
  Chile maintained an A+ rating. Fitch has a similar system.
Moody’s
  considers a Baa3 or higher rating to be of investment grade, and a rating of
  Ba1 and below is speculative. Greece received a B1 rating from Moody's in
  2019, while Italy had a rating of Baa3. In addition to their letter-grade
  ratings, all three of these agencies also provide a one-word assessment of
  each country's current economic outlook: positive, negative, or stable.
Sovereign Credit Ratings in the Eurozone
The European
  debt crisis reduced the credit ratings of many European nations and led to
  the Greek debt default. Many sovereign nations in Europe gave up their
  national currencies in favor of the single European currency, the euro. Their sovereign debts are no longer
  denominated in national currencies. The
  eurozone countries cannot have their national central banks "print
  money" to avoid defaults. While the euro produced increased trade
  between member states, it also raised the probability that members will
  default and reduced many sovereign credit ratings.
Sovereigns Rating (http://countryeconomy.com/ratings/)


Part
  II: Yield curve (or Term structure)      Self-produced
  video     Game      Quiz

https://www.ustreasuryyieldcurve.com/
US Treasuries Yield Curve - October 22, 2024
·       
  Inverted Yield Curve: The curve starts high at
  the short end, with a peak around 1-month maturity, and then declines,
  hitting a low point at around 3 years. This is indicative of an inverted
  yield curve, which often signals an impending
  economic recession.
·       
  Steepening Beyond 10 Years: After the 10-year mark,
  the curve starts to rise again, indicating investors expect higher returns
  for longer maturities, possibly due to anticipated future inflation or uncertainty.

Or at https://www.gurufocus.com/yield_curve.php
Current Treasury Yield Curve vs. prior years’
Summary:
  
  ·  Inflation:
·  Stock Market:
·  Economic Growth:
| Yield Curve Type | Definition | What It Means | Historical Significance | Example | 
| Steep Upward Yield Curve | Long-term interest rates are significantly higher than
    short-term rates. | Signals investor confidence in strong future economic growth
    and rising inflation. | Often appears during periods of economic recovery and expansion,
    following recessions or slow growth periods. | 2013-2014: After the 2008 financial crisis, the yield curve steepened
    as the U.S. economy began to recover. | 
| Normal Yield Curve | Long-term interest rates are moderately higher than short-term
    rates. | Indicates steady economic growth with moderate inflation
    expectations. | The most common yield curve during periods of stable economic
    growth without immediate concerns of recession. | 2017-2018: The U.S. economy showed steady growth, and the Fed gradually
    raised interest rates to manage inflation. | 
| Flat Yield Curve | Little difference between short-term and long-term interest
    rates. | Signals uncertainty about future economic growth or transitionary
    economic periods. | Often seen before a slowdown or recession, or when monetary
    policy is in transition. | 2019: The U.S. yield
    curve flattened as economic growth slowed and concerns about a recession
    increased. | 
| Inverted Yield Curve | Short-term interest rates are higher than long-term interest
    rates. | Investors are concerned about the future economy, often
    predicting a recession. | Has preceded every U.S. recession since the 1970s, signaling
    slowing growth or an upcoming recession. | August 2019: The U.S. yield curve inverted for six days, preceding the
    2020 COVID-19-triggered recession. | 
| Recent Inverted Yield Curve | Short-term interest rates (2-year) exceeded long-term rates
    (10-year, 30-year). | Investors foresee economic challenges, signaling concerns
    about a potential slowdown or recession. | One of the longest inversions, signaling concerns about
    inflation and possible recession. | 2023-2024: The yield curve inverted starting in 2022 and remained inverted
    into 2024, signaling concerns about inflation, aggressive Fed rate hikes,
    and fears of a potential recession. | 
Are There Any Concerns About a Recession in
  2025?
| Economic Signal | What It Means | 
| Inverted Yield Curve (2023-2024) | The yield curve has been upside down for a long time. This
    usually means people are worried about the future, and it can predict a
    slowdown in the economy. | 
| Fed Rate Hikes | The Fed is raising interest rates fast to fight inflation.
    This can make borrowing expensive and slow down the economy. | 
| High Inflation | Prices are still going up, especially for things like housing
    and energy. High prices can make people spend less, which slows the
    economy. | 
| Global Problems | Issues like the war in Ukraine and China's economy affect
    trade and can hurt the U.S. economy. | 
| Consumer Sentiment | People are unsure about the future, so they might spend less.
    If this happens, the economy can slow down. | 
The probability of a recession now stands at
  35% - by JP Morgan
https://www.jpmorgan.com/insights/global-research/economy/recession-probability
Key takeaways

 ~ Supplement 1 ~  -Year vs. 10-Year Spread: A Quick Indicator for Economy
  ~

https://fred.stlouisfed.org/series/T10Y2Y
Notes: 
     ~ Supplement 2 ~ Expectation Theory ~
Example:
  Given that the current 2-year rate is 4.1% and
  the 1-year rate is 4.3%, what is the expected 1-year
  rate one year from now? (Answer: 3.9%. Why?)

Homework (due with the second midterm exam): 
1.    
  Given
  that the current 2-year rate is 4% and the 1-year
  rate is 3%, what is the expected 1-year
  rate one year from now? 
2.    
  Based on current indicators like the yield curve and Federal Reserve actions,
  do you think a recession is likely in 2025? Why or why not?
Is A Recession Coming
  For The U.S. Economy?
Simon
  Moore  Aug 30, 2024,12:08pm EDT
https://www.forbes.com/sites/simonmoore/2024/08/30/is-a-recession-coming-for-the-us-economy/
The
  U.S. economy grew at a healthy 3% annual rate as of the latest Q2 GDP report.
  However, as the Federal Reserve signals that interest rate cuts are likely,
  what are the risks? A 2024 recession is generally seen as unlikely, but
  metrics that economics take seriously hint that a recession could occur, perhaps
  in 2025.
Two
  Key Indicators Call A Recession
Two
  historically proven indicators suggest a recession could be coming. The first
  is the Sahm Rule, this implies that when inflation rises materially within a
  year, a recession is likely on the way. That’s because
  jobs are so important to the economy. When people lose their jobs, they
  typically cut back on spending. That can slow growth.
For
  example, the Employment Situation Report for July 2024, showed unemployment
  at 4.3% up from 3.5% a year earlier. These are still relatively low
  unemployment figures, but the increase is a concern for some economists.
Secondly,
  the yield curve has now been calling for a recession for two years now.
  Currently, analysis by the New York Federal Reserve suggests that using the
  yield curve metric, the chance of a recession in the next 12 months is about
  50%.
Essentially,
  this analysis implies that as the Federal Open Market Committee raises
  interest rates, as they have done up to July 2023, so a future recession
  becomes likely. That relationship is historically robust. However, this
  economic cycle has been unusual in many respects, and the yield curve
  indicator has been wrong so far.
Assessment
  of a 2024 Recession
A
  recession typically comes with 2 quarters of negative growth. We’re running out of time for that to happen in 2024 because
  the first half of the year saw positive economic growth. Therefore, if a 2024
  recession were occurring, it would have to have already begun. Of course,
  that’s not impossible given the economic data is
  reported with a lag.
Forecasting
  market Kalshi, currently puts the chance of a 2024 recession at around 9%.
  However, some economists are more pessimistic. For example, J.P. Morgan
  estimate a 2024 recession probability of about 1 in 3 as of August 15 based
  primarily on labor market risks as well as some softness in manufacturing and
  the Euro area. However, it is worth noting that economists do have a record
  of forecasting recessions more frequently than they occur.
 
What
  To Expect
The
  stock market is a powerful recession indicator, too. It often declines ahead
  of economic weakness. After some concern in early August caused a sell-off,
  the S&P 500 has currently rebounded to almost its recent high. This
  suggests a recession may not be imminent in the eyes of financial markets.
Nonetheless,
  correctly calling a recession is a challenge and the two metrics that do have
  particularly impressive forecasting records are calling for a recession
  currently. These are the Sahm Rule and the yield curve. However, there have
  been many unique aspects to the pandemic recovery and relatively robust
  recession predictors getting it wrong may be another quirk of this economic
  cycle.
Still,
  the next jobs report on September 6 will be closely watched. Unemployment has
  been on a steadily increasing path for 2024 albeit of historically low
  levels. It remains to be seen to what extent the U.S. economy can continue to
  grow should unemployment move up further from here.
~ Let's learn about bonds by playing the Bond Game! ~
Check it out at https://www.jufinance.com/game/bond
Date: October 29, 2024
  Location:
  In the classroom
  Format: Closed book
  and closed notes
The
  exam will include:
This
  exam is non-cumulative, meaning it
  will only cover material from after the first midterm.
1.    
  Understanding Order
  Types
2.    
  Call and Put Options
  Basics
3.    
  Why Diversify?
4.    
  Understanding the
  S&P 500
5.    
  Company Weighting in the
  S&P 500
6.    
  S&P 500 Sector
  Weighting
7.    
  Diversification and Risk
8.    
  Comparing ETFs: SPY vs.
  QQQ
9.    
  Growth vs. Value Stocks
10.  Understanding
  Yield Curves and Economic Indicators
11.  Behavioral
  Finance and Investing Biases
12.  Risk
  Tolerance and Personal Investment Strategy
13.  Bond
  Market Overview and Comparisons
14.  Bond Rating Agencies and
  Altman Z-score
Short Answer Questions
|    Bitcoin
    Basics: From Transactions to Technology The Basics
    of Bitcoins and Blockchains on youtube (FYI)(from 4:31:00 - …) (from 4:57:41 - …)  (from 5:32:27 - …)Part
    I - Blockchain in general, and Bitcoin ·        PPT    
     ·       Quiz ·       Self-produced
    video: Understanding Bitcoin   ·       Also watch Blockchain
    Full Course - 4 Hours |Simplilearn (from beginning to 1:20:10) (FYI
    only) o  
    https://www.youtube.com/watch?v=SyVMma1IkXM&t=4849s 1.
    What is Bitcoin?
 2.
    The Technology Behind Bitcoin
 3.
    Why Bitcoin?
 4.
    How to Use Bitcoin
 5.
    The Impact of Bitcoin
 6.
    Future of Bitcoin
 Part II - Bitcoin
    Mining·      
    Blockchain
    Full Course - 4 Hours by Simplilearn (2:16:48 – 2:34:44)
    (FYI only) ·      
     PPT    ·      
     Quiz  ·      
     Bitcoin_Mining_Simulator· Self-produced video: Bitcoin Mining Explained! 1.    What is Bitcoin Mining?
 2. The Role of Hashing
 3. Proof of Work (PoW)
 4. Why is Mining Important?
 5. Mining Rewards
 6. Environmental Concerns
 Summary
 Part III – Bitcoin Wallet  ·      
    ppt     ·      
    Quiz ·      
    Simplilearn
    4 hour course (2:35:34 – 2:57:05)   
    (FYI only) ·      
    Self-produced
    video: Stay Safe in Crypto - MetaMask 1. What is a Bitcoin Wallet?
 2. How Does a Bitcoin Wallet Work?
 3. Types of Bitcoin Wallets
 4. Why Use a Bitcoin Wallet?
 5. How to Use a Bitcoin Wallet
 6. Security Tips
 Summary
 (Disclaimer: Some of the slides posted
    on this website are screenshots from the Simplilearn 4 Hour
    Blockchain video at https://www.youtube.com/watch?v=SyVMma1IkXM&t=4849s) Bitaddress.org    Bitaddress.org
    is an open-source, web-based tool for generating Bitcoin addresses and
    their corresponding private keys. It's a simple and secure way to create
    Bitcoin wallets offline, without needing to rely on a centralized service. How
    to Use Bitaddress.org:1.    
    Access the Site:
    Go to bitaddress.org.
    To enhance security, you can download the site’s HTML file and run it
    offline. 2.    
    Generate a Bitcoin Address: ·      
    Move your mouse around or type random
    characters in the provided box to add randomness. This process helps in
    generating a unique Bitcoin address. ·      
    Once enough randomness is collected, a
    Bitcoin address and its corresponding private key will be displayed. 3.    
    Save Your Keys: ·      
    You can print the generated address and
    private key on paper (often called a paper wallet). ·      
    Store the printed document securely, as
    anyone with access to your private key can access your Bitcoin. 4.    
    Use the Address: ·      
    The Bitcoin address can be shared with
    others to receive Bitcoin. ·      
    The private key is used to send or
    transfer Bitcoin from that address. Important: Always ensure you are using Bitaddress.org securely, preferably offline, and keep your private key safe to prevent unauthorized access to your funds. Homework (due with final)  1.     Tyler and Emanuel
    both have purchased Bitcoin through their Robinhood accounts, where they
    don't have access to private or public keys. Questions: 
 2.    
    Layton has purchased Tether (USDT) and is storing it
    in a Coinbase wallet. Question: Is Layton's USDT safe in his Coinbase wallet, or is there a risk
    involved? What advice would you give him
    regarding the security of his USDT holdings? Hint: 
 3.     Given Bitcoin's divisibility into smaller units—such as millibitcoin (1 mBTC = 0.001 BTC), microbitcoin
    (1 μBTC = 0.000001 BTC), and satoshi (1
    satoshi = 0.00000001 BTC)—should it be included in your
    investment portfolio? For instance, one satoshi is approximately $0.000676,
    making Bitcoin accessible for investment at various levels. What are the potential benefits and
    risks of adding Bitcoin to your portfolio? 4.     What
    is double spending, and why is it a concern for digital currencies like
    Bitcoin?  Describe how Bitcoin's
    blockchain technology helps prevent double spending.  Blockchain
    Full Course - 4 Hours  (1:06:26 – 1:08:31)5.     Can transactions be altered, and is
    this a concern for digital currencies like Bitcoin? Describe how Bitcoin's
    blockchain technology helps prevent data tampering.. Blockchain
    Full Course - 4 Hours  (1:02:50 – 1:06:26)6.      What are
    the differences between Bitcoin and Bitcoin Cash? ·      
     Blockchain
    Full Course - 4 Hours  (1:08:31 – 1:11:34)·       Bitcoin Cash (BCH): https://bitcoincash.org/ ·       Bitcoin (BTC): https://bitcoin.org/en/   | 
Websites for beginners learning about Ethereum and
  blockchain:
1.    
  Ethereum Foundation Blog
  https://blog.ethereum.org/
2.    
  Consensys
  Academy  https://consensys.io/academy
3. Blockgeeks
4. Coursera - Blockchain Specialization
5. CryptoCompare
6. CoinDesk
7. DappRadar
8. The Ethereum Reddit Community
9. Binance Academy https://academy.binance.com/\
Ethereum 101: Smart Contracts,
  DApps, and the Future of Decentralization
| Part I – What is
    Ethereum? A Comparison between Ethereum and Bitcoin    Quiz What is Ethereum?    ·      
      Simplilearn
    4 hour Blockchain Video (from 
    1:26:00 – 2:19:34 )·      
    Self-produced
    video: Ethereum 2.0 & Smart Contracts: Simple Guide to Key Concepts1. Introduction to Ethereum
 2. Key Features of Ethereum
 3.    
    A Comparison between Bitcoin and Ethereum   ·      
      Simplilearn
    4 hour video (2:57:06 – 3:03:00) 
 Part II – Ethereum
    Mining      1. What is Ether Mining?
 2. How Ether Mining Works
 3. Equipment Needed
 4. Mining Solo vs. Joining a Pool
 5. Steps to Start Mining Ether
 6. Transition to Proof of Stake (PoS)
 Part III – Smart
    Contract   (FYI)     Quiz ·      
    Simplilearn
    4 hour video (from 1:27:14  to
    2:13:44  )    ·      
    Self-produced video on smart contract
     1. Definition
 2. How Smart Contracts Work
 3. Example of a Smart Contract
 Software Needed for Smart Contracts1. Development Environment
 2. Blockchain Network
 3. Wallet and Blockchain Interface
 Why Do We Need Smart Contracts?1. Automation
 2. Trust and Transparency
 3. Cost Efficiency
 4. Security
 5. Global Reach
 Summary
 Part IV – Solidity
    Coding Simplilearn
    6 hour video (from 1:26:00–2:41:55 
    ) (FYI) 1. Introduction to Solidity
 2. Purpose of Solidity
 How to Compile and Deploy a Solidity Contract1. Writing a Smart Contract
 
 
 2. Compiling the Smart Contract
 
 
 3. Deploying the Smart Contract
 
 Procedure Summary
 Conclusion
 Part V – DApp
    (Decentralized Application) and DAO    
    (FYI) ·       
    Simplilearn
    4 hour video (from  3:02:31 
    to 3:09:15  ) 1. Definition
 2. Key Characteristics of DApps
 3. How DApps Work
 4. Examples of DApps
 Why Do We Need DApps?1. Trust and Security
 2. User Control and Ownership
 3. Innovation and Accessibility
 Challenges and Considerations1. Scalability
 2. User Experience
 Conclusion
 Part VI – Real World
    Examples       1. Walmart – Supply Chain Management·       
    Overview:
    Walmart uses blockchain technology to improve the traceability and
    transparency of its food supply chain. This implementation helps Walmart
    quickly identify and address issues such as contamination or recalls,
    ensuring food safety and reducing waste. ·       
    Blockchain Platform: IBM
    Food Trust (built on Hyperledger Fabric) 
    https://www.ibm.com/products/supply-chain-intelligence-suite/food-trust ·       
    Website: 
 ·       
    Additional
    Information: Walmart was one of the first major
    retailers to adopt blockchain for supply chain management, initially
    focusing on tracing pork and leafy greens to enhance food safety. 2. Maersk – Shipping and Logistics
    with TradeLens·       
    Overview:
    Maersk, in collaboration with IBM, developed TradeLens, a blockchain-based
    platform designed to streamline global shipping processes. TradeLens
    enhances transparency, reduces paperwork, and increases efficiency by
    providing real-time access to shipping data and documents. ·       
    Blockchain Platform: TradeLens
    (built on Hyperledger Fabric) ·       
    Website: TradeLens   https://www.tradelens.com/ ·       
    Additional
    Information: TradeLens has partnered with numerous
    shipping companies, ports, and customs authorities worldwide to create a
    more connected and efficient global trade ecosystem. 3. De Beers – Diamond Provenance
    Tracking with Tracr·       
    Overview:
    De Beers uses the Tracr platform to track diamonds from the mine to the
    retail point. This ensures that each diamond is ethically sourced and
    conflict-free, enhancing consumer trust and maintaining the integrity of
    their supply chain. ·       
    Blockchain Platform: Tracr
    (developed by De Beers) ·       
    Website:
    De Beers Tracr   https://www.tracr.com/ ·       
    Additional
    Information: Tracr allows consumers to verify the
    origin and journey of their diamonds, promoting transparency and ethical
    sourcing in the diamond industry. 4. Nestlé – Food Supply Chain
    Transparency·       
    Overview:
    Nestlé leverages blockchain technology to enhance
    the transparency and traceability of its food products. By tracking
    ingredients through the supply chain, Nestlé ensures
    quality, safety, and ethical sourcing. ·       
    Blockchain Platform: IBM
    Food Trust (built on Hyperledger Fabric) ·       
    Website:
    Nestlé and IBM Food Trust  https://www.ibm.com/blogs/think/2019/04/tracing-your-mashed-potatoes-on-ibm-blockchain/ ·       
    Additional
    Information: Nestlé's
    participation in IBM Food Trust helps the company monitor the supply chain
    in real-time, ensuring that products meet safety standards and are sourced
    responsibly. 5. FedEx – Package Tracking and
    Logistics·       
    Overview:
    FedEx explores blockchain technology to improve its package tracking
    system, aiming for more secure and transparent tracking information for
    shipments. Blockchain enhances the reliability and efficiency of tracking packages
    through the supply chain. ·       
    Blockchain Platform: Potential
    Platforms: Hyperledger Fabric, Ethereum, or proprietary
    solutions ·       
    Website:
    FedEx Blockchain Initiatives  
    https://www.fedex.com/en-us/about/policy/technology-innovation/blockchain.html · Additional Information: FedEx has been involved in blockchain pilot projects to explore how distributed ledger technology can optimize logistics and reduce fraud. 6. Provenance – Supply Chain
    Transparency for Various Industries·       
    Overview:
    Provenance is a platform that helps businesses track the origins and
    journey of their products using blockchain. This ensures transparency,
    ethical sourcing, and allows consumers to verify product claims. ·       
    Blockchain Platform: Ethereum
    and other blockchain technologies ·       
    Website: Provenance  https://www.provenance.org/ ·       
    Additional
    Information: Provenance works with various
    industries, including fashion, food, and consumer goods, to provide
    detailed product histories and build consumer trust through transparency. 7. Microsoft – Azure Blockchain
    Services·       
    Overview:
    Microsoft offers Azure Blockchain Services, enabling businesses to build,
    deploy, and manage blockchain applications easily. Numerous companies use
    Azure Blockchain to develop solutions across different industries such as
    finance, supply chain, and healthcare. ·       
    Blockchain Platform: Azure
    Blockchain (supports multiple blockchain frameworks
    including Ethereum, Hyperledger Fabric) ·       
    Website:
    Microsoft Azure Blockchain https://azure.microsoft.com/en-us/blog/digitizing-trust-azure-blockchain-service-simplifies-blockchain-development/ ·       
    Additional
    Information: Azure Blockchain provides tools and
    templates to help enterprises integrate blockchain into their existing
    systems, facilitating faster and more secure transactions. 8. JPMorgan Chase – Financial
    Services with Quorum·       
    Overview:
    JPMorgan Chase developed Quorum, an enterprise-focused version of Ethereum,
    to facilitate secure and efficient financial transactions. Quorum is used
    for various applications, including payment processing, interbank
    transfers, and blockchain-based financial instruments. ·       
    Blockchain Platform: Quorum
    (a fork of Ethereum developed by JPMorgan Chase) https://phemex.com/academy/what-is-quorum-jp-morgan ·       
    Website:
    Quorum by ConsenSys  https://consensys.io/blog/what-is-consensys-quorum ·       
    Additional Information:
    Quorum enhances Ethereum's capabilities by adding privacy features and
    improving performance, making it suitable for enterprise use cases in the
    financial sector. 9. IBM – Various Enterprise
    Blockchain Solutions·       
    Overview:
    IBM offers a range of blockchain solutions tailored for different
    industries, including supply chain, finance, healthcare, and more. IBM
    Blockchain, built on Hyperledger Fabric, provides the infrastructure for
    businesses to create secure and scalable blockchain applications. ·       
    Blockchain Platform: IBM
    Blockchain (built on Hyperledger Fabric)   ·       
    Website:
    IBM Blockchain  https://www.ibm.com/blockchain ·       
    Additional
    Information: IBM collaborates with numerous
    enterprises to implement blockchain solutions that enhance transparency,
    security, and efficiency in their operations. 10. Amazon Web Services (AWS) –
    Managed Blockchain Services·       
    Overview:
    Amazon Web Services offers Amazon Managed Blockchain, a fully managed
    service that makes it easy to create and manage scalable blockchain
    networks using popular frameworks like Hyperledger Fabric and Ethereum. ·       
    Blockchain Platform: Amazon
    Managed Blockchain (supports Hyperledger Fabric and
    Ethereum) ·       
    Website: Amazon
    Managed Blockchain  Distributed Ledger
    Software & Technology - Amazon Managed Blockchain - AWS ·       
    Additional
    Information: AWS Managed Blockchain allows
    businesses to quickly set up and manage blockchain networks without the
    overhead of maintaining the underlying infrastructure, supporting various
    use cases from supply chain to digital identity. 11. Coca-Cola – Supply Chain and
    Product Authentication·       
    Overview:
    Coca-Cola utilizes blockchain technology to enhance its supply chain
    management and product authentication processes. Blockchain helps Coca-Cola
    track ingredients, ensure quality, and authenticate products to prevent
    counterfeiting. ·       
    Blockchain Platform: IBM
    Food Trust (built on Hyperledger Fabric) ·       
    Website:
    Coca-Cola and IBM Food Trust https://shping.com/shping-and-ibm-food-trust-pioneering-a-new-era-of-product-transparency-for-consumers/ ·       
    Additional
    Information: By integrating blockchain into its
    supply chain, Coca-Cola ensures better transparency and efficiency, from
    sourcing raw materials to delivering finished products. 12. Pfizer – Pharmaceutical Supply
    Chain Management·       
    Overview:
    Pfizer uses blockchain to improve the traceability and security of its
    pharmaceutical supply chain. Blockchain helps Pfizer ensure the
    authenticity of medicines, prevent counterfeiting, and comply with
    regulatory requirements. ·       
    Blockchain Platform: Provenance,
    IBM Blockchain, or other enterprise blockchains ·       
    Website:
    Pfizer and Blockchain Initiatives   https://news.crunchbase.com/health-wellness-biotech/pharmaceuticals-blockchain-crypto-web3-pfizer-pfe/ ·       
    Additional
    Information: Blockchain technology enables Pfizer to
    maintain a secure and transparent record of its supply chain, enhancing
    trust and safety in its pharmaceutical products. 13. Starbucks – Coffee Supply Chain
    Tracking·       
    Overview:
    Starbucks has explored using blockchain to track the provenance of its
    coffee beans, ensuring quality and ethical sourcing. Blockchain helps
    verify the journey of the coffee from farm to cup, enhancing transparency
    and consumer trust. ·       
    Blockchain Platform: IBM
    Food Trust (similar to Walmart and Nestlé) ·       
    Website:
    Starbucks and Blockchain  https://stories.starbucks.com/press/2022/starbucks-brewing-revolutionary-web3-experience-for-its-starbucks-rewards-members/ ·       
    Additional
    Information: By leveraging blockchain, Starbucks can
    provide customers with detailed information about the origin and quality of
    their coffee, supporting sustainable and ethical sourcing practices. 14. BP – Energy Supply Chain
    Management·       
    Overview:
    BP utilizes blockchain technology to manage and optimize its energy supply
    chain. Blockchain helps BP track the movement of energy resources, ensure
    compliance with regulations, and improve the efficiency of transactions. ·       
    Blockchain Platform: IBM
    Blockchain or other enterprise solutions ·       
    Website:
    BP and Blockchain  https://www.hartenergy.com/exclusives/bp-tries-out-blockchain-energy-trading-30388 ·       
    Additional
    Information: BP's adoption of blockchain in the
    energy sector demonstrates how blockchain can enhance transparency, reduce
    costs, and improve operational efficiency in complex supply chains. 15. Anheuser-Busch InBev – Beverage
    Supply Chain Transparency·       
    Overview:
    Anheuser-Busch InBev uses blockchain to enhance the transparency and
    efficiency of its beverage supply chain. Blockchain enables the company to
    track ingredients, monitor production processes, and ensure the
    authenticity of its products. ·       
    Blockchain Platform: IBM
    Food Trust (built on Hyperledger Fabric) ·       
    Website:
    AB InBev and IBM Food Trust   https://www.foodnavigator.com/Article/2019/08/06/Anheuser-Busch-InBev-joins-new-IBM-blockchain ·       
    Additional
    Information: By integrating blockchain into its
    supply chain, Anheuser-Busch InBev ensures better quality control,
    traceability, and consumer trust in its beverage products. 
 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|    https://etherscan.io/ | 
| Etherscan.com
    is a popular blockchain explorer specifically designed for the Ethereum
    network. It allows users to explore and search the Ethereum blockchain for
    transactions, addresses, tokens, prices, and other activities. Key Features of Etherscan:1.    
    Transaction Tracking: ·      
    You can search for any Ethereum
    transaction by entering its transaction hash (TXID) into the search bar.
    This will provide details such as the amount transferred, gas fees, block
    confirmation, and the status of the transaction (e.g., pending, successful,
    failed). 2.    
    Wallet and Address Lookup: ·      
    Etherscan allows you to view the balance
    and transaction history of any Ethereum address. Just enter the wallet
    address in the search bar to see the current Ether balance, list of ERC-20 tokens
    held, and transaction history. 3.    
    Smart Contract Interaction: ·      
    You can view, verify, and interact with
    smart contracts directly on Etherscan. It shows the contract's source code,
    ABI (Application Binary Interface), and allows you to execute functions if
    the contract is verified. 4.    
    Token Information: ·      
    Etherscan provides information on all
    ERC-20 tokens, including their contract address, holders, transactions, and
    price data. 5.    
    Gas Tracker: ·      
    The site features a gas tracker that
    shows real-time information on Ethereum gas prices, helping users choose
    optimal times for transactions to minimize fees. How to Use Etherscan:1.    
    Search Transactions or Addresses: ·      
    Enter a transaction hash, wallet
    address, or smart contract address into the search bar to retrieve detailed
    information. 2.    
    Explore Contracts: ·      
    If you're dealing with a smart contract,
    you can search for it on Etherscan to review its code, check its status, or
    interact with it directly. 3.    
    Check Gas Fees: ·      
    Use the gas tracker to monitor current
    gas prices and plan your transactions accordingly. 4.    
    Token Lookup: ·      
    Search for any ERC-20 token to view its
    distribution, market data, and associated transactions. Etherscan
    is an essential tool for anyone working with Ethereum, offering
    transparency and a wealth of information about the blockchain. | 
NFT 101 – Understanding
  Non-Fungible Token
·       Quiz
1)     Fungibility:
·       
  NFTs are non-fungible
  tokens, meaning each one is unique and cannot be exchanged on a one-to-one
  basis like fungible tokens (e.g., Bitcoin).
·       
  Each NFT represents a
  specific digital item or asset.
2)     Ownership
  of Digital Assets:
o   NFTs
  can represent ownership of various digital assets, including:
§  Digital
  art
§  Music
§  Videos
§  Collectibles
o   Purchasing
  an NFT provides proof of ownership, similar to a certificate of authenticity.
3)     Indivisibility:
·       
  Unlike cryptocurrencies like
  Bitcoin, which can be divided into smaller units, NFTs are indivisible.
·       
  An NFT exists as a whole
  token that cannot be split.
4)     Storage
  on Blockchain:
o   NFTs
  are stored on a blockchain, which is a
  secure digital ledger that records all transactions and ownership.
o   The
  blockchain allows for verification of authenticity and ownership history,
  making it difficult to forge or counterfeit NFTs.
5)     Support
  Across Blockchains:
·      
  Although Ethereum
  is the most popular blockchain for NFTs, other blockchains like Binance
  Smart Chain, Flow, and Tezos
  also support NFT creation and trading.
6)     Smart
  Contracts:
·       
  NFTs utilize smart
  contracts, which are self-executing agreements where the
  terms are directly written into code.
·       
  Smart contracts automate the
  transfer and ownership rules of NFTs, ensuring that transactions are executed
  as agreed upon without intermediaries.
7)     Verification
  of Physical Assets:
o   NFTs
  can be linked to physical assets (e.g., luxury goods, real estate) to provide
  proof of authenticity and ownership.
o   This
  capability helps reduce fraud and ensures that buyers are purchasing genuine
  items.
8)     Cryptocurrency
  Transactions:
·       
  NFTs are primarily bought
  and sold using cryptocurrencies, with
  Ether (ETH) being the most common currency for NFT transactions.
·       
  The use of cryptocurrency
  facilitates quick and secure transactions on blockchain platforms.
9)     Legal
  Recognition:
·       
  The legal status of NFTs is
  evolving, with many jurisdictions beginning to recognize them as assets that
  can be owned and traded.
·       
  As the market grows, legal
  frameworks are being developed to address ownership, copyright, and transfer
  rights related to NFTs.
10)  Market
  Popularity:
·       
  The NFT market has seen
  significant growth, with high-profile sales reaching millions of dollars.
·       
  This popularity has drawn
  attention from various industries, including art, gaming, and entertainment.
International Finance
Part 1 - 11/12/2024
  In-Class Discussion: The Global Impact of Trump’s Economic Strategies
· Quiz 1 (Tariff and Quota) Quiz 2 (MAGA)
·       Discussion Platform : Interactive
  Discussion Platform on Trump’s International Economic Policies  
Class
  Discussion Day 1 Video       Class Discussion Day 2
  video
Discussion instruction:
Welcome
  to our class discussion on Trump's 2024 Economic Promises, organized into
  nine engaging chapters. Here's how we will conduct our analysis and gather
  everyone's insights:
1.    
  Chapters Overview:
  Each chapter focuses on a specific economic policy topic related to Trump's
  potential presidency. You'll find a brief explanation of the topic, followed
  by a key question for discussion.
2.    
  Your Instructor's
  Opinion: I have shared my perspective on each
  topic to provide a foundation for your understanding. Feel free to agree,
  disagree, or bring up new ideas!
3.    
  Group Discussions:
4.    
  Exporting Your Insights:
  At the end of the discussion, all the collected opinions will be exported
  into a summary file, which we will review together as a class. This will help
  us understand the diversity of perspectives and engage in a broader analysis.
Tariffs and Quotas
| Aspect | Tariffs | Quotas | 
| Definition | A tax imposed on imported goods | A limit on the quantity of goods that can be imported | 
| Purpose | To raise government revenue and protect domestic industries | To restrict the volume of imports and protect domestic
    production | 
| Types | - Ad Valorem (percentage-based) | - Absolute Quotas (fixed limit) | 
|   | - Specific (fixed fee per unit) | - Tariff-Rate Quotas (low tariff up to a limit, then higher
    tariff) | 
|   | - Compound (combination of ad valorem and specific) |   | 
| Effect on Imports | Increases the cost of imported goods, reducing their demand | Limits the quantity of imports directly, creating scarcity | 
| Revenue Impact | Generates revenue for the government | Does not generate revenue (unless paired with tariffs) | 
| Impact on Prices | Raises prices of imported goods, potentially leading to higher
    domestic prices | Can lead to higher prices due to restricted supply | 
| Market Flexibility | Allows market to adjust based on price changes | Creates a rigid cap on imports, limiting flexibility | 
| Administrative Ease | Easier to implement and monitor | More complex to administer and enforce | 
| Historical Examples | - Smoot-Hawley Tariff Act | - Voluntary Export Restraints (VERs) | 
|   | - Steel tariffs in the U.S. | - Import quotas on Japanese cars in the 1980s | 
| Pros | - Protects domestic industries | - Protects domestic producers by limiting competition | 
|   | - Generates revenue for the government | - Can be effective in reducing trade deficits | 
| Cons | - Higher prices for consumers | - Can lead to supply shortages and higher consumer prices | 
|   | - Risk of trade wars and retaliatory tariffs | - May result in inefficiency and favoritism | 
| Economic Efficiency | Less distortion compared to quotas | More distortion and inefficiency in the market | 
 
| Policy | Year | Purpose | Outcome | 
| Smoot-Hawley Tariff Act | 1930 | Protect American farmers and manufacturers | Led to global trade retaliation, worsened the Great Depression | 
| Tariff of Abominations | 1828 | Protect Northern industries from cheap imports | Benefited Northern manufacturers but hurt the Southern
    economy; increased regional tensions | 
| U.S. Steel Tariffs | 2002 | Save American steel jobs and domestic industry | Raised steel prices, hurt steel-using industries, led to WTO
    ruling against the U.S.; tariffs removed in 2003 | 
| Voluntary Export Restraints (VERs) | 1981 | Protect U.S. automobile industry from Japanese imports | Higher car prices in the U.S.; Japanese automakers established
    factories in the U.S. | 
| Textile Quotas (Multi-Fiber Arrangement) | 1974-2004 | Protect textile industries in developed countries | Higher prices for consumers; after lifting in 2005, significant
    increase in imports, impacting domestic producers | 
Part 2 - 11/14/2024
  In-Class Discussion
Factors Determining
  the Value of the U.S. Dollar       Quiz
| Factor | Impact on $ Value | Explanation | Example | Case Study | 
| Inflation Rate | Decreases | Higher inflation reduces purchasing power | If U.S. inflation is higher than Japan's, the U.S. dollar weakens
    against the yen | The U.S. dollar weakened in the 1970s due to high inflation | 
| Interest Rates | Increases | Higher interest rates attract foreign investment | When the Federal Reserve raises rates, the dollar strengthens | In 2018, the Fed’s rate hikes boosted the dollar value | 
| Trade Balance | Decreases if deficit widens | A higher trade deficit increases the supply of dollars
    globally | If the U.S. imports more than it exports, the dollar weakens | The trade deficit contributed to the dollar's fall in the
    early 2000s | 
| Economic Growth | Increases | Strong economic performance attracts investors | If the U.S. economy is growing faster than Europe, the dollar
    strengthens | The dollar strengthened after the 2008 financial crisis
    recovery | 
| Political Stability | Increases | Stable politics attract investment, raising the dollar’s value | During global crises, investors buy U.S. assets as a safe
    haven | The dollar strengthened during the European debt crisis | 
| AI and Technology | Mixed | AI can boost productivity (increase value) but also create job
    displacement concerns (decrease value) | Widespread use of AI could improve manufacturing output but
    may reduce jobs | The U.S. dollar's future strength could be impacted by
    AI-driven economic shifts | 
| National Debt | Decreases | High national debt may lower investor confidence and increase
    concerns about the U.S.'s ability to pay its obligations | If the U.S. debt grows faster than GDP, the dollar could
    weaken | The U.S. dollar faced pressure in the 2010s due to rising
    national debt | 
Homework (due with final)
1)    
  How do MAGA
  policies use tariffs to protect American industries? 
2)    
  How can MAGA
  tariffs affect everyday Americans?
3)     How might MAGA policies
  impact the U.S.’s relationships with its trading partners? 
4)     Can AI help bring
  manufacturing back to the U.S., and will it restore jobs?
5)    
  Predict whether the U.S. dollar will
  strengthen or weaken during Trump’s second term from 2025 to 2028.
·       
  Choose one: Will the U.S. dollar become stronger or
  weaker?
·       
  Explain your choice in 2-3
  simple sentences, thinking about factors like tariffs, trade policies, or
  national debt.
Term Project 2
  on Trump’s Tariff Policy (due with final, option 2)
·       
  Russia and China’s Goal:
  Russia and China aim to reduce the dominance of the US dollar in global
  finance. They are not trying to fully replace the dollar as the world's
  reserve currency but want to create alternatives, particularly in payment
  systems.
·       
  Payment
  Systems, Not Unified Currency: The BRICS countries
  are unlikely to establish a unified currency due to differences in economic
  and fiscal policies. Instead, they are focused on building bilateral payment
  systems that allow them to trade directly in their own currencies, bypassing
  the dollar.
·       
  China’s Efforts:
  China is making significant progress with systems like CIPS, an alternative
  to SWIFT, which handles both messaging and settlement of payments.
  Additionally, China is leading initiatives like the mBridge project, a cross-border
  central bank digital currency effort connecting multiple countries.
·       
  Russia’s Strategy:
  Since sanctions have significantly impacted Russia, it is motivated to
  explore financial systems that can bypass the dollar, making bilateral
  arrangements with countries like China more appealing.
·       
  Overall Progress:
  Although progress is being made, especially since the Russia-Ukraine
  conflict, these initiatives remain small in scale and experimental. They are far from challenging the
  dollar's global role but could become more significant over time, especially
  for sanctions evasion and economic independence from Western systems.
While
  Russia and China are actively working to reduce the dollar's influence through
  alternative payment systems, significant hurdles remain, including economic
  differences, limited global trust in alternative currencies, and the dollar’s
  unmatched liquidity and stability.
Note:
mBridge (Multiple Central Bank Digital Currency Bridge) is a collaborative project aimed at creating a cross-border payment system using multiple Central Bank Digital Currencies (CBDCs). The project is led by the Bank for International Settlements (BIS) Innovation Hub, in collaboration with central banks from Hong Kong, Thailand, the United Arab Emirates, and China.
· SWIFT's Dominance:
SWIFT (Society for Worldwide Interbank Financial Telecommunication) is the primary messaging system used by banks globally for secure and automated cross-border payments. It has been in use for nearly five decades and connects over 11,000 financial institutions across 200+ countries.
· SWIFT Is Not a Payment System:
SWIFT is a communication platform that facilitates the secure transmission of payment instructions between banks but does not transfer money itself. Funds are moved between banks through existing account relationships or intermediaries.
· Legacy System vs. Efficiency:
Before SWIFT, international transactions relied on telex, which was slow and prone to errors. SWIFT improved the process by using standardized codes and automating payment messages, reducing costs and time delays.
· Global Influence and Sanctions:
SWIFT’s role is not limited to financial transactions; it has geopolitical significance. The US and other authorities have used SWIFT to impose economic sanctions on countries like Russia, Iran, and North Korea by excluding their banks from the network.
· Emergence of Alternatives:
Russia and China have developed alternative systems, such as Russia's SPFS (System for Transfer of Financial Messages) and China's CIPS (Cross-Border Interbank Payment System). However, these systems currently have limited reach compared to SWIFT.
· Role of Blockchain and Cryptocurrency:
Blockchain technology introduces new possibilities for international transactions, offering decentralized and transparent methods of transferring value. However, widespread adoption in traditional banking remains challenging due to integration issues and the need for education and trust.
· Limitations of Crypto for Sanctions Evasion:
Cryptocurrencies are not a perfect solution for bypassing sanctions. Blockchain transactions are publicly recorded, making them traceable. Additionally, crypto systems have safeguards to alert users when interacting with sanctioned entities.
· Network Effects:
SWIFT benefits from strong network effects, making it difficult for new systems to attract banks away from an established and efficient network. Approximately 95% of SWIFT payments are completed within 24 hours.
· Technological Evolution:
Discussions around blockchain and emerging technologies have pushed SWIFT to innovate, resulting in improvements like the Global Payments Innovation (GPI), which enhances speed, transparency, and tracking of payments.
· Future of Financial Systems:
While blockchain and central bank digital currencies (CBDCs) have the potential to transform global finance, replacing legacy systems like SWIFT will take time. The development of these technologies could eventually change the way money moves worldwide, but the transition will be gradual.
· Potential for Personal Control:
Blockchain technology gives people the choice to manage their own funds without intermediaries, while others may prefer using traditional financial services. This flexibility could shape future financial behaviors and systems.
· SWIFT’s Adaptation:
As the financial landscape evolves, SWIFT may need to adapt to integrate new types of payments, like CBDCs, to maintain relevance and continue supporting global transactions.
Term Project 3 – Develop
  a Stock Data Fetcher in Google Sheets  
// Function to serve the HTML file
function doGet() {
  return HtmlService.createHtmlOutputFromFile('index');
}
function fetchStockData(ticker, startDateStr) {
  var sheet = SpreadsheetApp.getActiveSpreadsheet().getActiveSheet();
  
  // Clear previous data
  sheet.getRange("A1:F1000").clearContent();
  // Set the header row for daily data
  sheet.getRange("A1").setValue("Date");
  sheet.getRange("B1").setValue("Closing Price");
  sheet.getRange("C1").setValue("Stock Name");
  // Fetch and display the stock name using GOOGLEFINANCE
  var stockNameFormula = `=GOOGLEFINANCE("${ticker}", "name")`;
  sheet.getRange("C2").setFormula(stockNameFormula);
  // Set up the formula to fetch daily data using GOOGLEFINANCE
  var formula = `=GOOGLEFINANCE("${ticker}", "close", "${startDateStr}", TODAY(), "daily")`;
  sheet.getRange("A2").setFormula(formula);
  // Wait for the data to populate
  SpreadsheetApp.flush();
  // Copy the daily data into an array
  var dataRange = sheet.getRange("A2:B1000").getValues();
  var validData = dataRange.filter(row => row[0] && row[1]); // Remove empty rows and invalid data
  if (validData.length === 0) {
    return "No data available. Please check the stock
  ticker and date range.";
  }
  // Set the header row for monthly data in columns D, E, and F
  sheet.getRange("D1").setValue("Month");
  sheet.getRange("E1").setValue("Closing Price");
  sheet.getRange("F1").setValue("Monthly Return");
  // Process data to calculate the last trading day of each month
  var monthlyData = {};
  validData.forEach(row => {
    var date = new Date(row[0]);
    var price = row[1];
    var monthKey = `${date.getFullYear()}-${(date.getMonth() + 1).toString().padStart(2, '0')}`;
    // Keep updating to get the last price of the month
    monthlyData[monthKey] = price;
  });
  // Write the monthly data and calculate returns
  var previousPrice = null;
  var rowIndex = 2;
  for (var month in monthlyData) {
    var price = monthlyData[month];
    sheet.getRange(rowIndex, 4).setValue(month); // Write month in column D
    sheet.getRange(rowIndex, 5).setValue(price); // Write price in column E
    if (previousPrice !== null) {
      var monthlyReturn = ((price - previousPrice) / previousPrice) * 100;
      sheet.getRange(rowIndex, 6).setValue(monthlyReturn.toFixed(2) + "%"); // Write return in column F
    }
    previousPrice = price;
    rowIndex++;
  }
  return "Data fetched and returns calculated
  successfully!";
}
Ctrl + S).1.     In
  the Apps Script editor, click on the +
  button next to "Files" and select HTML.
2.     Name
  the new file Index.html.
3.     Paste
  the following HTML code into the Index.html
  file:
<!DOCTYPE html>
<html>
<head>
  <base target="_top">
  <title>Stock Data Fetcher</title>
  <style>
    body {
      font-family: Arial, sans-serif;
      margin: 20px;
    }
    h2 {
      color: #333;
    }
    label {
      display: block;
      margin-top: 10px;
    }
    input, button {
      margin-top: 5px;
    }
    .footer {
      margin-top: 20px;
      font-size: 12px;
      color: #666;
      text-align: center;
    }
  </style>
</head>
<body>
  <h2>Stock Data Fetcher</h2>
  <label for="ticker">Stock Ticker:</label>
  <input type="text" id="ticker" placeholder="e.g., AAPL,
  WMT" /><br>
  <label for="startDate">Start Date:</label>
  <input type="date" id="startDate" /><br>
  <button onclick="fetchData()">Fetch Data</button>
  <p id="status"></p>
  <!-- Button to open the Google Sheet -->
  <button onclick="openGoogleSheet()">Open Google Sheet</button>
  <script>
    function fetchData() {
      var ticker = document.getElementById('ticker').value;
      var startDate = document.getElementById('startDate').value;
      // Call the Apps Script function
      google.script.run.withSuccessHandler(function(response) {
        document.getElementById('status').innerText = response;
      }).fetchStockData(ticker, startDate);
    }
    function openGoogleSheet() {
      // Replace with the URL of your Google Sheet
     var sheetUrl = "YOUR_GOOGLE_SHEET_URL";
  // Replace with your actual Google Sheet URL
      window.open(sheetUrl, "_blank");
    }
  </script>
</body>
</html>
Troubleshooting Tips:
1. Ensure You Have the Correct Google Sheet URL:
"YOUR_GOOGLE_SHEET_URL"
        in the HTML script with the correct URL of your Google Sheet.sheetUrl
         variable in the HTML file.2. Set Google Sheet Share Settings:
3. Update the HTML Code:
openGoogleSheet function with your actual
        Google Sheet URL:function openGoogleSheet() {  var sheetUrl = "YOUR_GOOGLE_SHEET_URL"; // Replace with your actual Google Sheet URL  window.open(sheetUrl, "_blank");}Final Exam – 11/23/2024, Closed
  Notes, Closed Book
~
  11/22-11/23, 118A, from 1 pm – 5 pm ~
~ Study Guide ~
1.    
  Bitcoin
2.    
  Bitcoin Mining
3.    
  Ethereum and Smart Contracts
4.    
  Blockchain Technology
5.    
  Non-Fungible Tokens (NFTs)
6.    
    Economic Policies
7.    
  Impact of Tariffs on the U.S. Economy
8.    
  Factors Determining the Value of the U.S. Dollar
9.    
  BRICS and Their Efforts to Challenge the Dollar
10.  SWIFT (Society for Worldwide
  Interbank Financial Telecommunication)
11.  Russia and China’s Strategy
1.    
  What are the key differences between Bitcoin and
  Ethereum, and how do their purposes differ?
2.    
  Explain the concept of a non-fungible token (NFT)
  and how it differs from a cryptocurrency like Bitcoin.
3. Explain how tariffs can protect American industries but also negatively impact consumers.
4. How does the imposition of tariffs under Trump's MAGA policies impact U.S. trade relations?
5. Describe the main purpose of SWIFT and why it is significant in global finance.
6. Discuss the impact of U.S. sanctions on countries like Russia and how this has motivated the development of alternative financial systems.

See you in 2025! 
