ECON102 Study Guide - Final Guide: Overnight Rate, Loanable Funds, Speculation

• School: University of Alberta
• Department: Economics
• Course: ECON102
• Professor: All

Document Summary

Chapter 14: money and the monetary system. The nancial system achieves what we talked about above by crea2ng nancial assets that can be bought and sold. For example, owning a part of a company allows that person to share in the pro ts, or in other words he has an equity stake in the company. A stock is a nancial asset that represents par2al ownership of a company. Stockholders are en2tled to receive a por2on of a company"s pro ts. A dividend is a payment made periodically to all shareholders of a company. Pe ra2o (not very important, just an aside) Price of the stock vs the earnings of the stock. That"s how you can nd out if a stock of under or overvalued. A loan is issued when a lender provides funds to a borrower in exchange for future repayment of the amount loaned plus interest. Loans are generally less risky and less rewarding than buying a stock.