MGFB10H3 Chapter Notes - Chapter 1: Savings Account, Tmx Group, Montreal Exchange
Document Summary
Finance: the study of how and under what terms savings (money) are allocated b/w lenders and borrowers. Financial securities: contracts that come into existence whenever funds are transferred. 4 major domestic groups in our economy. Individuals (aka household sector: businesses, government, foreign (non-residents) W/i canada we had lots of debt but they were to other canadians. When we add everything up, these debts to ourselves net out to zero b/c one person"s debt is another person"s asset. E. g. patents and goodwill that are used by the firms to generate future cash flows. Financial assets: a claim that one individual or institution has on another: securities such as stocks and bonds. Firm finances its investments in real asset by issuing financial assets in the debt market for investors. Net assets/net worth= real assets + financial assets (aka shareholder"s equity) Households own real assets and own net financial assets issued by the govt, corporations and non- residents.
