Lec4303_CH1-2 - Financial Markets and Institutions Chapter...

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Financial Markets and Institutions Chapter 1 Why Study Financial Markets and Institutions?
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Lecture Objectives Why Study Financial Markets? Why Study Financial Institutions? Applied Managerial Perspective
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Why Study Financial Markets? The Stock Market The stock market is the market where common stock (or just stock), representing ownership in a company, are traded. Companies initially sell stock (in the primary market) to raise money. But after that, the stock is traded among investors (secondary market). Of all the active markets, the stock market receives the most attention from the media, probably because it is the place where people get rich (and poor) quickly.
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Stock Market
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Why Study Financial Markets? Debt markets, or bond markets, allow governments, corporations, and individuals to borrow to finance activities. In this market, borrowers issue a security, called a bond, that promises the timely payment of interest and principal over some specific time horizon. The interest rate is the cost of borrowing.
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Bond Market and Interest Rates Complete list of interest rates http://www.federalreserve.gov/releases
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Quick Quiz Typically, increasing interest rates a. discourages individuals from saving. b. discourages corporate investments. c. encourages corporate expansion. d. encourages corporate borrowing. e. none of the above.
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Why Study Financial Markets? The Foreign Exchange Market The foreign exchange market is where international currencies trade and exchange rates are set. Although most people know little about this market, it has a daily volume around $1 trillion! View historical financial data and forecasts at http://www.forecasts.org/data/index.htm
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Foreign Exchange Market
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Quick Quiz A Strong dollar benefits _______ and hurts _____ a. American businesses; American consumers.
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This note was uploaded on 03/07/2010 for the course FIN 3403 taught by Professor Keys during the Spring '10 term at Florida Southern College.

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Lec4303_CH1-2 - Financial Markets and Institutions Chapter...

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