ECON 305 Lecture Notes - Lecture 13: Corporate Bond, Eurodollar, New York Stock Exchange

• School: University of Victoria
• Department: Economics
• Course: ECON 305
• Professor: Omar

Document Summary

Econ 304 chapter 2 an overview of the financial system. Function of financial markets: cha(cid:374)(cid:374)el fu(cid:374)ds f(cid:396)o(cid:373) those that ha(cid:448)e su(cid:396)plus fu(cid:374)ds to those that ha(cid:448)e a sho(cid:396)tage of fu(cid:374)ds, p(cid:396)o(cid:373)otes e(cid:272)o(cid:374)o(cid:373)i(cid:272) effi(cid:272)ie(cid:374)(cid:272)y (cid:271)y p(cid:396)odu(cid:272)i(cid:374)g a(cid:374) effi(cid:272)ie(cid:374)t allo(cid:272)atio(cid:374) of (cid:272)apital. Directly improves the well-being of consumers by allowing them to time purchases better: di(cid:396)e(cid:272)t fi(cid:374)a(cid:374)(cid:272)e. Borrowers borrow funds directly from lenders in financial markets by selling them securities tructure of financial markets: debt markets: de(cid:271)t i(cid:374)st(cid:396)u(cid:373)e(cid:374)ts. Structure of financial markets: equity markets: e(cid:395)uity ma(cid:396)kets - common stocks. Equity holders are the owners of firms: (cid:396)esidual (cid:272)lai(cid:373)a(cid:374)ts, (cid:448)oti(cid:374)g (cid:396)ights to (cid:272)o(cid:374)t(cid:396)ol the fi(cid:396)(cid:373) (cid:894)usually o(cid:374)e sto(cid:272)k o(cid:374)e (cid:448)ote(cid:895) Nonvoting shares are an exception (e. g. canadian tire corp. , ctc. a-t: p(cid:396)i(cid:373)a(cid:396)y ma(cid:396)ket. New security issues sold to initial and subsequent buyers raise funds for the firm directly. Exchanges and over-the-counter (otc) markets exchanges: toronto stock exchange (tse),