REM 400 Lecture Notes - Lecture 1: United States Treasury Security, Byrsonima Crassifolia, Relative Price

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Prices in finance: an interest rate is the price of a dollar of income today measured in dollars received or paid at future date t . A good in ordinary life is an object or service that is valued and consumed by you or others. Examples: a kilo of apples, a pint of beer, a newspaper, an hour of labour by a doctor, dentist, professor, etc. Goods are measured in physical units (kilo, pint, hour ) Goods are distinguished from each other by many distinct qualities: example of apple versus orange. Goods are traded in markets (apples and oranges at a grocery, a home in a residential real estate market, etc. ) A good in nance is a unit of income at a speci c date. Ask yourself: what is being traded in a nancial market? (stock and bond markets, mortgages in home nance markets, an informal loan between friends, etc )

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