ch. 1 - Chapter 1 Why Study Money Banking and Financial...

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Chapter 1 Why Study Money, Banking, and Financial Markets? Why Study Money, Banking, and Financial Markets *To examine how financial markets such as bond, stock and foreign exchange markets work *To examine how financial institutions such as banks and insurance companies work *To examine the role of money in the economy Financial Markets *Markets in which funds are transferred from people who have an excess of available funds to people who have a shortage of funds The Bond Market and Interest Rates *A security (financial instrument) is a claim on the issuer’s future income or assets *A bond is a debt security that promises to make payments periodically for a specified period of time *An interest rate is the cost of borrowing or the price paid for the rental of funds The Stock Market *Common stock represents a share of ownership in a corporation *A share of stock is a claim on the earnings and assets of the corporation The Foreign Exchange Market *The foreign exchange market is where funds are converted from one currency into another
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This note was uploaded on 04/17/2008 for the course ECON 2035 taught by Professor Stahl during the Spring '08 term at LSU.

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ch. 1 - Chapter 1 Why Study Money Banking and Financial...

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