Chapter 1

1. When financial markets channel funds from savers to investors, who benefits? Explain.

6. Firms such as Moody's and Standard & Poor's study corporations that issue bonds. They publish "ratings" for the bondsevaluations of the likelihood of default. Suppose these rating companies went out of business. What effect would this have on the bond market? What effect would it have on banks?

Chapter 2

1. The U.S. government owns more than 8000 tons of gold, stored mainly at Fort Knox in Kentucky. Why did the government accumulate this gold? Should it continue to hold the gold or sell it?