ECON 2010 Chapter : Econ2010Chapter9
Document Summary
The term money in economics has a specific meaning from different everyday use. The income you don"t spend qis savings. When your house appreciates, your wealth increase. Increase in value of stock is a capital gain. Interest on savings is one important reason people put their savings in banks. The financial system improves the allocation of saving: Provides information to savers about possible uses of funds. Help savers share the risks of individual investment projects. Financial intermediaries are firms that extend credit to borrowers using funds raised from savers. Many commercial banks accept deposits from individuals and businesses and make loans. Banks and other intermediaries specialize in evaluating the quality of borrowers. A bond is a legal promise to repay a debt. Maturation date- the date when the principal amount will be repaid. The term of a bond is the length of time from issue to maturation. Coupon payments- the periodic interest payments to the bondholder.
