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Lecture 2

ECON 3K03 Lecture Notes - Lecture 2: Insider Trading, Financial Institution, Adverse Selection


Department
Economics
Course Code
ECON 3K03
Professor
Helene Wagner
Lecture
2

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Copyright © 2014 Pearson Canada Inc.
Chapter 2
AN OVERVIEW
OF THE FINANCIAL SYSTEM
Mishkin/Serletis
The Economics
of Money, Banking,
and Financial Markets
Fifth Canadian Edition

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Copyright © 2014 Pearson Canada Inc. 2-2
Learning Objectives
1. Summarize the basic function performed by financial
markets
2. Explain why financial markets have several
classifications
3. Describe the principal money market and capital
market instruments
4. Express why the government regulates financial
markets and financial intermediaries

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Copyright © 2014 Pearson Canada Inc. 2-3
Function of Financial Markets
Channel funds from economic players that have surplus
funds to those that have a shortage of funds
Direct finance
borrowers borrow funds directly from lenders in financial
markets by selling them securities
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