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Find all rational, irrational, and complex zeros | Ch 3 - 69

Precalculus: Mathematics for Calculus | 6th Edition | ISBN: 9780840068071 | Authors: James Stewart ISBN: 9780840068071 161

Solution for problem 69 Chapter 3

Precalculus: Mathematics for Calculus | 6th Edition

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Precalculus: Mathematics for Calculus | 6th Edition | ISBN: 9780840068071 | Authors: James Stewart

Precalculus: Mathematics for Calculus | 6th Edition

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Problem 69

Find all rational, irrational, and complex zeros (and state their multiplicities). Use Descartes Rule of Signs, the Upper and Lower Bounds Theorem, the Quadratic Formula, or other factoring techniques to help you whenever possible.P1x2 6x 4 18x 3 6x 2 30x 36P

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Chapter 14: Money, Banking, and Financial Institutions Functions of Money  Medium of Exchange o Used to buy/sell goods  Unit account o Goods valued in dollars  Store of Value o Hold some wealth in money form  Money Definition M1 o M1 (cash in your pocket)  Currency  Checkable deposits o M2  M1 plus near-monies  Savings deposits Federal Reserve – Banking System  Historical background (1912)  Different entities of Fed  Board of Governors  Appointed by the President and confirmed by the senate for 14 year non-renewable term  Headquartered in DC  7 governors, one of them is appointed as a chair  12 federal reserve banks o Serve as the central bank o Quasi-public banks o Bankers Bank o NY Fed is the most important  Federal Open Market Committee (FOMC) o 12 voting members, 7 governors plus 5 presidents of district banks  Actually votes on issues, a lot of people attend meetings but only 12 actually vote  Presidents rotate each year on who votes but NY President ALWAYS votes o Makes important monetary policy decisions o Meets about 8 times a year  Meeting schedule is public  Commercial banks and thrifts o 6,800 commercial banks o 8,700 thrifts  Thrifts – kind of commercial banks (credit unions/ loan associations) o Big Four:  BOA – Acquired Merrill Lynch  JP Morgan Chase – Acquired Bear Sterns  Citi Group  Wells Fargo – Acquired Wachovia Bank  Federal Reserve Functions o Issues currency  Regulating money supply in the US  Fed is independent institution that is created by gov’t but separated from the gov’t o Set reserve requirements  Fed mandates every commercial bank to keep fraction of total deposits in reserves (10%) o Lend money to banks (Fed operates discount window) o Collect checks o Act as fiscal agent for US government o Supervise Banks o Control the money supply and influence interest  Federal Reserve Independence o Established by Congress as an independent agency o Protects the Fed from political pressures o Feds policies cannot be reversed o Fed is given a freedom to pursue its own objectives and choose monetary policy tools to do so o Feds objectives  Dual mandate: price stability (2% inflation rate) and maximum and sustainable economic growth o Enables the fed to take actions to increase interest rates in order to stem inflation as needed (can be politically unpopular move) o Political Business Cycle o Opponents: undemocratic, unaccountable, not transparent enough o Dodd-Frank Act: Wall Street Reformation Act of 2010 o GAO Government Audit (accountability) office can audit Fed’s lending programs o Proposal to audit Fed’s monetary policy decisions, didn’t pass  Fed kept it’s independence The Financial Crisis of 2007-09  Mortgage default crisis  Subprime mortgage loans  Mortgage-backed securities  Government programs that encouraged home ownership o Bad incentives provided by mortgage lenders (no credit checks) o Declining real estate values  Securitization – the process of slicing up and bundling groups of loans into new securities  These securities (MBS) ended up everywhere  Insurance companies insured those securities  Sever conflict of interest  Credit Rating Agencies o Moody’s, S&P, Fitch o Ratings vary from D – AAA. Credit rating agencies assigned AAA rating to lots of the MBS. Why Because SP, Moody, and Fitch get paid by the same corporations who issue those securities  When interest rates increased, and real estate values fell, lots of homeowners defaulted on mortgage loans  Defaults happen on massive scale and the system collapsed  Why no one saw it coming o Failure to predict massive defaults across the country o Exposure and interconnected mess of many large financial institutions o Importance of many non-bank institutions (shadow banks) and lack of regulation  Shadow banks: not commercial but act like banks (hedge funds, mutual funds) o Free riding (everyone thought someone else was supposed to do the job) o Insurance (gave false sense of security to investors) o Many securities were traded over-the-counter (no regulations)  Failures and near-failures of financial firms o Countrywide to BOA: second largest lender o Washington Mutual to JPMorgan Chase: largest lender o Wachovia (fourth largest bank) to Wells Fargo  Other firms filed for bankruptcy (Lehman Brothers) Sep. 18, 2008  Troubled Asset Relief Program (TARP) o Allocated $700 billion to make emergency loans o Instead treasury ended up buying stock o Saved several institutions from failure  Fed extensively lent money to financial institutions  If corporation knows that it will always get bailed out by the government, then it has very strong incentives to be reckless Post Crisis US Financial Services  Major categories of financial institutions o Commercial banks o Thrifts o Insurance companies o Pension funds o Securities firms o Investment banks  Consolidation in the industry  Need to know words o Mutual funds: sell shares to large number of small investors and invest funds in diversified portfolio of securities (stocks, bonds, commercial paper) o Security: financial asset (something that promises future stream of income) that’s traded on the financial markets o Stocks: pay dividends, not guaranteed. Varies with company profitability o Bonds: make fixed payments, guaranteed, does not vary o Derivative: promise to deliver certain asset at a specified price at some future date.  For example: Futures -> promise to deliver one gallon of gas at $3 on April 7, 2017 o Investment Bank: financial institutions that provide various services:  Wealth management  Securities trading  Underwriting: helping private start ups go public or helping already established corporations to sell new issues of stock  Guarantee a certain price for a stock and later resell to investors on NYSE or NASDAQ (tech stocks)  Connection between Wall Street and Main Street o Wall street or financial institutions provide necessary funding to al kinds of firms (small, medium-sized, and large corporations) for long-run and day to day operations) o For example: car parts company may take out a loan from a bank to stock its inventories and slowly repay the loan using its sales proceeds. o Or a large corporation may sell a commercial paper to investment bank (or mutual fund), raise millions to purchase necessary equipment and pay employee salaries o Therefore, if Wall Street is unable to make loans to or buy commercial paper from main street the main street cant stock inventories or pay salaries  Credit Crunch o Commercial banks used to be just banks in the past, before 1999  Glass Steagall Act of 1933: separated commercial banking from investment banking and insurance  Some people want to bring Glass Steagall back o Wall Street Reform and Consumer Protection Act (Dodd- Frank Act of 2010)  Passed to help prevent many of the practices that led to the crisis  Major provisions:  Financial stability oversight council o Collection of Fed, FDIC, SEC, Treasury, Comptroller of currency, others)  Living will of SIFIs (Systematically important financial institution)  More securities traded on public exchanges  Retaining credit risk  Critics say it adds heavy regulatory costs

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Chapter 3, Problem 69 is Solved
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Textbook: Precalculus: Mathematics for Calculus
Edition: 6
Author: James Stewart
ISBN: 9780840068071

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Find all rational, irrational, and complex zeros | Ch 3 - 69