ECON 1BB3 Lecture Notes - Lecture 4: Demand Curve, Term Of Office, Negative Relationship

• School: McMaster University
• Department: Economics
• Course: ECON 1BB3
• Professor: Bridget O' Shaughnessy

Document Summary

Financial institutions bring borrowers and savers together two financial institutions: financial markets, financial intermediaries. Financial markets directly bring together savers and borrowers; directly interact with firm or gov. t: bond market. Issued by large businesses and fed and prov governments. Purchase bonds b/c you get some financial return. Interest earned on bonds depend on 1) term and 2) risk: term = length of loan longer term = higher interest rate, riskier bond = higher rate of return than safer bond. Eg. bond by big trustworthy company = safer vs smaller less known. Mutual funds: people who save smaller amounts join together to purchase stocks and bonds on behalf of the people in the mutual fund, difference between actively managed funds and index funds. Actively managed: has a person in charge of deciding which stocks/bonds are purchased on behalf of those owners of fund shares. People making the decisions are earning a salary, which comes out of fees mutual fund owners pay.