ECON102 Lecture Notes - Lecture 5: Interest, Financial Institution, Xm Satellite Radio

• School: University of Waterloo
• Department: Economics
• Course: ECON102
• Professor: Maryann Vaughan

Document Summary

Income: the value of all things that people own, received during a period of time. Private saving: s = y t c , what remains of your income after paying taxes and consumption. Firms borrow for a variety of reasons. Households borrow to buy big-ticket consumption goods and new homes. Bond markets a bond is a debt instrument the issuer promises to make payments on specified dates there are a variety of types and conditions. Stock markets a stock is a share of ownership a stock is an equity. Borrower: accept deposits lender: buys government bonds and securities. Borrower: accept deposits lender: make loans, mortgage loans. Borrower: accept deposits from members lender: make loans, mortgage loans to members. Borrower: receive pension contributions lender: use funds to create a portfolio that will generate income. Borrower: receive insurance premiums lender: use funds received to create a portfolio to generate income. Net worth = value of assets value of liabilities.