RSM230H1 Chapter Notes - Chapter 1: Financial Intermediary, Credit Crunch, Financial Asset
Finance: study of how and under what terms savings (money) are allocated between lenders and borrowers. Under what terms, through what channels allocations are made. Opportunity for fraud when exchanging money for securities. More foreign liabilities as investors buy canadian securities as a result of financial stability concerns in europe. Debts within canada net out to zero since assets correspond to liabilities. Build new factory, increase inventory holdings, strategic asset acquisition decisions (merger, acquisition) Financial asset: claim that individual/institution has on another. Tracks borrowing/lending of major agents in financial system. Invest funds on behalf of others, change nature of transaction. Ultimate lender has indirect claim on ultimate borrower. Financial intermediary acts as principal on own behalf rather than agent for clients. Facilitate working of markets, provide direct intermediation, don"t change nature of transaction (broker) Direct intermediation with or without help of market intermediary.