New Chapter 5 Class Notes

New Chapter 5 Class Notes - Chapter 5: The Financial...

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Chapter 5: The Financial Markets I. Financial markets bring together those wanting to borrow money with those having surplus funds. They serve an intermediaries that facilitate the movement of funds between lenders and borrowers as well as between buyers and sellers. Several different types of markets exist and can be classified as follows: A. Physical Asset vs. Financial Asset Markets 1. Physical assets include computers, machinery, real estate, and other tangible assets. 2. Financial assets include stocks, bonds, notes, mortgages, and other claims on real assets. B. Spot vs. Futures Markets 1. Spot markets are markets where assets are bought or sold for immediate delivery. 2. Futures markets are those in which participants agree today to buy or sell an asset at some future date. C. Money vs. Capital Markets 1. Money markets are markets for short term (less than 1 year maturity), highly liquid debt securities such as money market funds, U.S. Treasury Bills, Commercial Paper, and CDs. 2.
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New Chapter 5 Class Notes - Chapter 5: The Financial...

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