ECON 3430 Lecture Notes - Lecture 4: Toronto Stock Exchange

• School: York University
• Department: Economics
• Course: ECON 3430
• Professor: Ahmet Akyol

Document Summary

Chapter 2 an overview of the financial system. By the end of this chapter, you will understand: the structure of financial markets. International dimensions of financial markets: various types of financial market instruments, various types of financial intermediaries. How transaction costs, risk sharing, information matter: reasons for and types of financial market regulations. Function of financial markets: channel funds from economic players that have surplus funds to those that have a shortage of funds, plays important role in the economy. Allows consumers to time their purchases: direct finance. Debt and equity markets: bonds - debt instruments. A contract between a borrower (who issues the bond) and lender (who owns it) Regularly payments until maturity (short-term, < 1 year, intermediate-term, 1-10 years, and long-term, >10 years. Equity holders are residual claimants: primary market. New security issues sold to initial buyers. Previously issued securities can be bought and sold. Brokers match buyers and sellers with each other.