ECO 1102 Study Guide - Credit Risk, Autarky, Government Budget Balance

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ECO 1102 Full Course Notes
46
ECO 1102 Full Course Notes
Verified Note
46 documents

Document Summary

Financial institutions in the canadian economy: canadian financial system moves economy"s resources from savers to borrowers, both parties borrow/save for their own reasons. Financial markets (institutions through which savers can directly supply funds to borrowers) Equity financing: the bond market is the market through which companies sell bonds ( certificate of indebtedness) . Bonds mature over the course of their term (or last forever in the case of a perpetuity). The prices of these stocks are determined by supply and demand. Financial intermediaries (financial institutions through which savers indirectly provide funds to borrowers: banks are the financial intermediaries with which people are the most familiar. Banks take in deposits that they pay interest on, and turn them into loans with slightly higher interest rates. These mutual funds allow people with small amounts of money to diversify with less risk than if they invested in one stock.