ECON 330 Lecture Notes - Lecture 2: United States Treasury Security, Unsecured Debt, Secondary Market
15 Dec 2019
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Buy/sell new equity shares or new bonds. Ex. buy new us treasury bond from the fed. Buy/sell equity or debt that already exists. Ex. buy treasury bond from stacy who already owns it. High liquidity - can sell at any time and easily. Personal loans not traded in the secondary market. Buyers and sellers meet at a location and time to exchange. Deal in longer-term debt and equity instruments. I buy 1m peanuts today and the bank agrees to buy them back from me next week. Very short term loan backed by the things being purchased. Banks lend and borrow excess reserves overnight. Quickly buy or sell bond for you. A commercial bank takes on all the risk. Foreign currencies deposited in banks outside the home country. Us dollars deposited in foreign banks outside the us or in foreign branches of us banks. Used to save for retirement with a pension (defined benefit plan)
