Part 1 Principles: lending, payments and risk-taking the financial system and its technology efficiency, stability and government intervention. Part 2 Interest rates and exchange rates: interest rates, exchange rates and security prices the level of interest rates and exchange rates money, prices, interest rates and exchange rates the structure of interest rates and exchange rates. Part 3 Intermediaries: understanding financial intermediaries commercial banks the banking industry - part 1 the banking industry - part 2 near banks - thrifts, finance companies and others payments and foreign exchanges insurance pension funds and mutual funds. Part 4 Markets: understanding security markets the market for government securities the money market the capital market the mortgage market and securitization the derivatives market - futures, options and swaps. Part 5 Stability and the central bank: managing liquidity and risk the stability of the financial system deposit insurance controlling the quantity of money monetary policy.

The behavior of different components of municipal bond yields may have a significant impact upon bond price behavior. Specifically, demand premiums created by banks may stabilize bond yields in some maturity ranges but not in others; for example, short‐term municipals may be stabilized but not long‐term. This research implies that bank demand behavior may create demand premiums that stabilize prices of short‐term municipal bonds relative to those of Treasury bonds of like maturity. While this implication is inconsistent with the residual theory of bank demand, it is consistent with the tax‐shield theory attributed to Hendershott and Koch [3, 4].