Note 2 - 9-3-09 - Bus 171A The 5 parts of the financial...

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Bus 171A The 5 parts of the financial system 1. Money a. Medium of exchange b. Store of value c. Unit of account 2. Financial instruments: stocks, insurance mortgages a. Transfer resources from savers to investors b. Transfer risk 3. Financial Markets: Markets in which we transact financial instruments a. Quick b. Low cost 4. Financial institutions (FI): Bank, securities firms, insurance companies a. Provide access to financial markets b. co 5. Federal reserve systems (Fed) US central Bank a. Responsible for monetary policy b. Regulatory responsibility c. Involved with foreign exchange FIs are grouped into two: a. Depository Institutions – those that accept deposits such as commercial banks and t b. Nondepository institutions: insurance companies, security firms… The 5 core Principles 1. Time has value a. Interest is fundamental 2. Risk requires compensation a. Investors must be paid to assume risk b. The higher the risk the higher the payment 3. Information and analysis are the basis of decisions
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This note was uploaded on 09/08/2010 for the course BUS 171A at San Jose State University .

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Note 2 - 9-3-09 - Bus 171A The 5 parts of the financial...

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