Who is the Fed?
Key Words from this lesson: FED (Federal Reserve), Market Condition & Interest Rate , Currency , Asset Valuation . What does the Fed do? - Maximize employment and stabilize prices. - Supervise and regulate banks. - Maintain stability of the Financial System. - Service debt for the US Government. Interesting Facts: - Before 1913, the US had over 30,000 currencies in circulation. - The FED is actually an independent institution, with government regulation and supervision. Market Conditions and Interest Rate: - In a bull market (leading to a greed cycle) the Fed can raise interest rate to try and calm the market. - In a bear market (a fear cycle) the Fed can cut interest rate to try and stimulate the market. Market Condition and Investments: Typically investors can compare the relative yields of investing in bonds/stocks, to decide which offers more attractive returns. - When interest rate is high, it is advantageous to buy bonds. Bond Coupons w