EC223 Lecture Notes - Lecture 1: Common Stock, Stock Market, Fiscal Policy
Document Summary
Financial markets are markets in which funds are transferred from people who have an excess of available funds to people who have a shortage. Examples of financial markets such as bonds and stock markets are crucial to promoting greater economic efficiency by transferring funds from people who do not have a productive use for them to those who do. Poorly functioning financial markets are one reason that many countries in the world remain desperately poor. Activities in financial markets have direct effects on personal wealth, the behaviour. Of businesses and consumers, and the cyclical performance of the economy. A security (also called a financial instrument) is a claim on the issuer"s future income or assets (any financial claim or piece of property that is subject to ownership) Interest rates have a tendency to move in unison. Financial systems comprise of banks, insurance companies, mutual funds, finance companies, and investment banks.
