[EC223] - Final Exam Guide - Comprehensive Notes for the exam (49 pages long!)
Document Summary
Market: a place where buyers and sellers cone together. Financial markets: involve transfer of funds from people who have excess of available funds to people who have shortage. Those with excess of available funds are called sellers/savers, while those with shortage are called buyers/borrowers. Financial market activities affect: wealth of individuals (value of assets minus liabilitites, behavior of business, cyclical performance of economy. Enables corporations and governements to borrow to finance activities. Bond: piece of paper certifying that someone who has borrowed money, promises to pay it back. Stock market: also referred to as equity market or stock exchange, most widely followed financial market in canada. Transaction that take p[lace in stock market are called equity finance. Equity: ownership of company and can take form of stocks or shares. If company wants to raise financial capital, sells off ownership through stock market. Stock is claim to partial ownership in firm while bond is certificate of indebtedness.
