ECON 2A03 Study Guide - Unemployment, Tax Credit, Stock Market
13 Apr 2014
School
Department
Course
Professor
Document Summary
Regulated by government institutions: provincial government regulates credit unions and caisses populaires. Bond market: a certificate of indebtedness that specifies the obligation of the borrower to hold the bond and pay back on a later date (iou) Interest paid and the maturity date is identified. Buyer (creditor) can hold bond or sell to someone else. Sale of bond called debt finance from company perspective: issued by large businesses, and government; savers are the households, term; risk. Long term bonds are riskier than short term bonds but offer higher rates of interest. Perpetuity: bonds that pay interest but have no maturity date: risk depends on who is issuing them determines the risk. Probability of company to pay back the bond: higher the credit risk of defaulting, the higher interest rate is demanded, the company carrying debt, recent changes in debt and revenues being earned determines the risk.
