ECON 2035 Chapter : ECON 2035 Notes
Document Summary
Components of financial systems: financial assets, while an asset it is something that is valued and is owned by a personal firm. Specifically, a financial asset is a value of what you own is a claim of a payment from another entity. If this financial asset is tradable (bought and sold) it is called financial security. Types of securities are money bonds, stocks, forex and securitized loans: stocks: share of ownership. Most watched: bond: lender to the corp. Bond market is where the interest rate is determined. Most important: forex: converting currency, securitized loans: securitization is when a non-tradable assets are converted into tradable securities. Most common is mortgages: financial institutions, borrowers have a profitable use but no funds. Direct finance lenders and savers: financial intermediary: will usually have collect fund. Will borrow from the savers and lend to the borrowers. Indirect finance: types of intermediary, commercial banks.
