ECON 104 Lecture Notes - Lecture 22: Market Liquidity, Debit Card, European Central Bank

• School: University of Victoria
• Department: Economics
• Course: ECON 104
• Professor: Xiang Ming

Document Summary

The financial system consists of the group of institutions in the economy that matches a person"s saving with another person"s investment. Financial markets are institutions through which savers ________ Bonds: certificates of indebtedness that specify obligations to the borrower to the holder of the bond: dept finance: is the action of raising money by selling a bond o. Risky bonds should offer higher return, this is why people take the risk/invest in them. Face value is the amount paid when the bond matures. Q: a bond"s value is @ maturity. You bought it yesterday for , not it"s worth . A: the interest rate (yield) was 11% when you purchased the bond. Profit calculation: the face value () initial investment () / initial investment () =11 o o: difference for waiting: [remaining profit () / current value () ] 100 = 5% Stock represents a claim/partial ownership in a firm/its profits.