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Economically, they are both loans against financial instruments. The difference is the collateral posted - repos by the Fed are generally against Treasury securities. This is not a small difference: it makes it much easier for a bank to access liquidity, since not all of its assets are Treasury securities. There’s a mechanical difference: a discount window ...


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(Looking at the question and notation used more closely, the formulation seems to be problematic in couple places.) General Fact Let $W$ be standard Brownian motion with respect to filtration $( \mathscr F_t )_{t \in [0,T]}$. Consider $(L_t)_{t \in [0,T]}$ defined by $$ \frac{dL_t}{L_t} = \psi_t dL_t, \; L_0 = 1. $$ In general, $L_t = e^{\int_0^t \psi_s ...


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A great starting point is "Fundamentals of Corporate Finance", Ross, Westerfield & Jordan. This book will give you a good overview of key concepts in finance. This book is widely used in introductory courses for non-finance majors, to both teach some fundamental ideas, and give a panoramic view of the field. "Trading" will probably be the topic that ...


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Net Present Value (NPV) as a soft concept existed probably even in antiquity but it was formalized and made popular by Irving Fisher in his book the Rate of Interest. Internal rate of return is basically a special application of NPV. It was also first formally introduced in Fisher's book although he called it 'rate of return over costs'. Duration of bonds ...


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Stock market is very complicated and there are many factors in play other than interest rates. For example, let's say the word on the street is that the Fed is going to increase interest rates by 50 basis points at its next meeting, but the Fed announces a increase of only 25 basis points. The news may actually cause stocks to increase – because assumptions ...


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