ECON 3660 Chapter Notes - Chapter 1: Market Capitalization, Secondary Market, Country Financial
19 Jan 2018
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Financial contracts: how much an initial investment will yield payment over time. Economic system and investment: investors rarely make transactions with company itself, generally when they buy good company, someone else is selling it as a. Bond- note that acknowledges indebtedness and specifies terms of repayment. Stock- enable investor to participate in business activities, while being protected from major drawbacks. Financial investment- investment by individuals in stocks and bonds -> investors enter securities markets and exchange cash for financial instruments. Real investment- occurs as a result of the corporation taking the capital and investing it in productive assets -> when money is exchanged between investors, no money actually reaches the corporation so this is not a real investment. Real assets- result of real investment and determines the productive capacity of the economy (land, buildings, machines, knowledge0. Financial assets- stocks or bonds, don"t represent societies wealth.
