Self-Study
10
Overview
Finance
There are no prerequisites.

Course Description

Economic indicators are those often-voluminous statistics released by government agencies, nonprofit organizations, and private companies. They provide measurements for evaluating the health of our economy, including the latest business cycles, consumer spending, inflation, housing, and more. Various economic indicators are released quarterly, monthly, weekly, and even daily.

Michael Walker provides an introductory overview of the world's most prevalent economic indicators, including those related to unemployment, consumer sentiment and confidence, inflation, productivity, housing, manufacturing, and international trade. This course reviews the impact that changes in these indicators have on the financial markets and monetary policy.



Instructor

Michael J. Walker, CPA

Michael J. Walker, CPA, is based in New England and has decades of accounting experience in the financial services, information technology services, and construction industries. He has an extensive technical accounting background that includes hands-on experience with U.S. GAAP and International Financial Reporting Standards (IFRS). His expertise includes accounting for financial instruments, securitizations, and other banking products. He graduated from Bentley University with a BS in finance and an MS in accountancy.



Course Specifics

Finance
Aug 25, 2017
There are no prerequisites.
SS3168026
254
None


Compliance Information

103220
Qualifies for CA Fraud: No


Learning Objectives

Upon successful completion of this course, participants will be able to:

Chapter 1

  • Identify the four phases of the business cycle
  • Indicate how various economic conditions impact the business cycle
  • Identify the types of economic indicators that exist and recognize the unique characteristics of each type
  • Recognize tools that are currently available to monitor economic indicators

Chapter 2

  • Identify the unique characteristics of financial markets
  • Recognize the types of financial instruments traded in various financial markets
  • Calculate 'simple' and 'compound' interest
  • Identify how a bond's stated interest rate and its yield-to-maturity impacts the price at which it is traded
  • Recognize how interests can vary based on the risk structure of interest rates
  • Identify how a yield curve illustrates the term structure of interest rates

Chapter 3

  • Identify the components of gross domestic product (GDP) and recognize how economic indicators impact these components
  • Calculate GDP
  • Identify the difference between nominal and real GDP
  • Recognize the economic impact of the GDP report

Chapter 4

  • Recognize the role that the Federal Reserve System ('the Fed') plays in financial markets
  • Identify the tools used by the Fed to conduct its monetary policy and explain how these tools impact the U.S. money supply
  • Calculate the two measures used by the Federal Reserve to estimate the U.S. money supply (M1 & M2)
  • Recognize the economic impact of the FOMC Statement and the other reports issued by the Fed

Chapter 5

  • Calculate the unemployment rate and recognize the inherent limitations of the unemployment rate
  • Recognize the characteristics and economic impact of the Employment Situation Report and other employment indicators
  • Identify the methods in which consumer sentiment and consumer confidence are measured
  • Identify how consumer income and spending is measured and presented on the Personal Income and Outlays report

Chapter 6

  • Calculate an annual rate of inflation
  • Identify the primary price indexes that measure inflation, including the CPI and PPI
  • Recognize the impact that commodities markets have on inflation
  • Recognize how economic growth is impacted by labor productivity
  • Identify the economic indicators used to monitor productivity

Chapter 7

  • Recognize the methods in which the Federal Reserve measures and reports industrial production and capacity utilization
  • Identify industrial production indicators that have the most impact on the economy
  • Recognize the impact that changes in the housing market has on the economy
  • Identify the economic indicators used to monitor the housing market

Chapter 8

  • Classify a country's balance of trade as either a 'trade surplus' or a 'trade deficit'
  • Identify scenarios where one country has an absolute advantage and/or a comparative advantage in producing a good over another country
  • Recognize the economic indicators used to monitor international trade


Table of Contents

Chapter 1 – Economic Indicators and Business Cycles

Learning Objectives

1.1   The Business Cycle

1.1.1   Business cycle defined

1.1.2   Phases of the business cycle

1.1.3   Causes of a recession

Inflation and Rising Interest Rates

Excess Inventories

When Asset Bubbles Burst

Oil Price Shocks

Decrease in Exports

Review Questions

1.2   Introduction to Economic Indicators

1.2.1   Economic indicators defined

1.2.2   Classification by timing

1.2.3   Classification by direction

1.2.4   What the indicators indicate

Consumer spending

Economic health

Manufacturing

Housing

Inflation

Productivity

1.2.5   Monitoring economic indicators

Economic calendars

Consensus Forecasts

Review Questions

Chapter 1 Summary

Chapter 2 – Financial Markets and Interest Rates

Learning Objectives

2.1   Overview of Financial Markets

2.1.1   What are financial markets?

2.1.2   Market participants

2.2   Structure of Financial Markets

2.2.1   Debt and equity markets

2.2.2   Primary and secondary markets

2.2.3   Exchanges and over-the-counter markets

2.2.4   Money and capital markets

Review Questions

2.3   Key Financial Markets

2.3.2   Bond market

2.3.3   Commodities markets

2.3.4   Foreign exchange markets

Review Questions

2.3.1   Stock market

2.4   Overview of Interest Rates

2.4.1   What are interest rates?

2.4.2   Simple and compound interest

2.4.3   Fixed and floating interest rates

2.4.4   Annual percentage rates (APR)

2.4.5   Yield-to-maturity (YTM)

2.5   Determination of Interest Rates

2.5.1   Money supply and demand

2.5.2   Interest rates and risk

Default risk

Liquidity risk

2.5.3   Yield curves

Review Questions

Chapter 2 Summary

Chapter 3 – GDP and Monthly Indicators

Learning Objectives

3.1   Gross Domestic Product (GDP)

3.1.1   GDP defined

3.1.2   Measuring GDP using the expenditure approach

3.1.3   Measuring GDP using other approaches

Production approach

Income approach

Review Questions

3.1.4   Nominal GDP vs. Real GDP

3.1.5   The GDP report

GDP and the Business Cycle

How Businesses Use GDP

How Governments Use GDP

How Investors Use GDP

Review Questions

3.2   Economic Indicators and GDP Components

3.2.1   Consumer fundamentals

3.2.2   Investment fundamentals

3.2.3   Government expenditure fundamentals

3.2.4   Net export fundamentals

Review Questions

Chapter 3 Summary

Chapter 4 – Federal Reserve and Monetary Indicators

Learning Objectives

4.1   The Federal Reserve System

4.1.1   Federal Reserve Banks

4.1.2   Member Banks

4.1.3   Board of Governors

4.1.4   Federal Open Market Committee (FOMC)

4.1.5   Federal Advisory Council (FAC)

Review Questions

4.2   Monetary Policy

4.2.1   Open market operations

4.2.2   Reserve requirements

4.2.3   Discount lending

4.2.4   Economic impact of monetary policy

Review Questions

4.3   The Money Supply

4.3.1   Money supply measures

4.3.2   History of the money supply and monetary policy

Review Questions

4.4   Following the Fed

4.4.1   The FOMC Statement

The Importance of the FOMC Statement

Forecasting the Future

Financial Markets’ Reactions

4.4.2   The Beige Book

4.4.3   Monetary Policy Report to the Congress

Review Questions

Chapter 4 Summary

Chapter 5 – Unemployment and Consumer Indicators

Learning Objectives

5.1   The Unemployment Rate

5.1.1 Defining unemployment

5.1.2   Calculating the unemployment rate

5.1.3   Criticisms of measuring unemployment

Review Questions

5.2   The Employment Situation Report

5.2.1   The household survey

5.2.2   The establishment survey

5.2.3   Comparing household and establishment employment

5.2.4   Market reaction to the employment situation report

5.3   Other Employment Indicators

5.3.1   Unemployment Claims Report

5.3.2   ADP Employment Report

5.3.3   Monster Employment Index

Review Questions

5.4   Consumer Sentiment and Confidence

5.4.1   Consumer Sentiment Index

5.4.2   Consumer Confidence Index

5.5   Personal Income and Outlays

5.5.1   Personal income

5.5.2   Disposable personal income

5.5.3   Personal spending

5.5.4   Personal savings

Review Questions

Chapter 5 Summary

Chapter 6 – Inflation and Productivity Indicators

Learning Objectives

6.1   Tracking Inflation

6.1.1   The effects of inflation

6.1.2   Calculating an annual rate of inflation

6.1.3   Deflation and disinflation

Review Questions

6.2   Inflation Measures

6.2.1   Consumer Price Index

6.2.2   Core inflation index

6.2.3   Producer Price Index (PPI)

6.2.4   Market reaction to inflation measures

6.3   Inflation and Commodities

6.3.1   Commodities and commodity exchanges

6.3.2   Commodity prices and inflation

Oil prices and inflation

Gold prices and inflation

Review Questions

6.4   Productivity and Economic Growth

6.4.1   Labor productivity

6.4.2   Aggregate production function

6.5   Productivity Indicators

6.5.1   Productivity and Costs Report

6.5.2   Employment Cost Index Report

Components of ECI

6.4.3   Market reaction to productivity indicators

Review Questions

Chapter 6 Summary

Chapter 7 – Industrial and Commercial Indicators

Learning Objectives

7.1   Industrial Production

7.1.1   Industrial production and capacity utilization

Industrial Production

Capacity Utilization

7.1.2   Durable goods orders

Table 1 – Durable Goods Manufacturers' Shipments and New Orders

Table 2 – Durable Goods Manufacturers’ Unfilled Orders and Total Inventories

7.1.3   Factory orders

7.1.4   Market reaction to industrial production indicators

Review Questions

7.2   Housing and Construction

7.2.1   New residential construction (a.k.a. housing starts)

7.2.2   Existing home sales

Existing Single-Family Homes Sales

Sales Price of Existing Single-Family Homes

7.2.3   New residential sales

7.2.4   Market reaction to housing and construction indicators

Review Questions

Chapter 7 Summary

Chapter 8 – International Trade Indicators

Learning Objectives

8.1   Introduction to International Trade

8.1.1   Imports, exports, and the balance of trade

8.1.2   Absolute and comparative advantage

8.1.3   Specialization and the gains from trade

Review Questions

8.2   International Trade Report

Market reaction

8.3   Measuring Trade Balances

8.3.1   Components of the current account balance

8.3.2   The balance of trade as the balance of payments

8.4   Summary of International Transactions

Current account

Capital and Financial Accounts

Market reaction

Review Questions

Chapter 8 Summary

Review Question Answers and Rationales

Glossary

Index

Final Examination

Answer Sheet

Course Evaluation



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