MGEC71H3 Chapter Notes - Chapter 1: The Market Common, Mortgage Loan, Monetary Policy

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Document Summary

Financial market: markets in which funds are transferred from people who have excess of available funds to people who have a shortage. Financial market channel funds from savers to investors promote economic efficiency. It affects personal wealth and behaviour of business. Well-functioning financial markets are a key factor in producing high economic growth. Security(financial instrument): a claim on the issuer"s future income or assets. Assets: any financial claim or piece of property that is subject to ownership. Bond: a debt security that promises to make payments periodically for a specified period of time. The bond market is where interest rates are determined. Interest rate: the cost of borrowing or the price paid for the rental of funds (mortgage, car loan interests ) the price over time of borrowing money. Higher interest rate deter purchases or investment, and encourage savings. Deter (prevent) you from buying a car or house & encourage you to save.

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