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Canada (158,426)
Economics (923)
ECN 204 (281)
Chapter 8

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Ryerson University
ECN 204
Christos Shiamptanis

Chapter 8Saving Investment and Financial SystemFinancial System consists of those institutions in the economy that helps to match one persons saving and investmentFinancial Market are the institutions through which a person who wants to save can directly supply funds to a person who wants to borrowBond it is a certificate of indebtednessIt is known as a IOUThe data of maturity is the date which the loan will be repaidThe amount that the company borrows from the bondholder is called the principleLong term bonds are more riskier than shortterm bonds because longterm bond holders have to wait for a longer timeBondholder receive first money first if the company goes bankrupt Stock a claim to partial ownership in a firmThe sale of stock to raise money is called equity finance The sale of bonds is called deft finance Bondholders get the money first and then the shareholderthe leftoversFinancial Intermediates are financial institutions though which saver can indirectly provide funds to borrowersBanksThe money that the bank has from the providers which pays lower interest than the loan interest help the bank give loansMutual fundsinstitutions that sell shares to the public and use the proceeds to buy portfolios of st
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