FINA 2710 Lecture Notes - Lecture 1: Financial Market, Financial Instrument, Canadian Imperial Bank Of Commerce
Document Summary
One primary function of the financial markets is to gather funds from parties with surpluses (i. e. lenders or savers) to invest and transfer their money to other parties with shortages (i. e. One primary function of the financial markets is to gather funds from parties with surpluses (i. e. lenders or savers) to invest and transfer their money to other parties with shortages (i. e. borrowers or spenders). Stated differently, financial markets are setups for lending and borrowing. Typically, they are designed for the wholesale levels in which (1) firms deal directly with other firms, (2) very large quantities of funds are at stake, and (3) borrowing and lending are not intermediated. Financial market is a very general term that includes a number of different types of markets for the creation and exchange of financial instruments (i. e. records of transactions). Arguably, financial markets are markets for trading bits of paper which represent sophisticated ious.