ECON 2035 Chapter Notes - Chapter 1: Financial System, Real Gross Domestic Product, Planned Economy
Document Summary
At maturity, the bond pays its face value. Before that, the owner may receive coupon payments: coupon bonds. Fixed payment loan: - face value (5yrs will mature in 2014 to receive face value, coupon rate. The percentage of face value paid every year: 5% = per year, medium term about 5 yrs. Long-term more than 5 yrs: discount bond. Commercial paper an i. o. u of 2: usually 1 yr or less, no coupon rate no yearly payment, buy at discount and receive face value at maturity, stocks, t bills, default risk. Interest- payments for the use of borrowed funds ii: default- failure to make promised payments on debts, stocks- (equity) ownership share in a corporation, generally more risk than a bond, stock holders, purpose: Residual clammits: help flow of fund from savers to investors, savers financial market investors. Iii: savers- have fund, but don"t have opportunity to invest ii.
