M&B Notes - Lecture2 Measuringanationswealth:...

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Lecture 2 08/09/2010 16:07:00 Measuring a nation’s wealth: GDP = C + I + G + NX NX = (X-M) C: 70-75% of wealth I: 20% G: 15% NX: -5% ^ In the US Issuing method: Debt and Equity markets Debts are bonds or mortgages Equities are things like common stock. Securities break down into Equity – Common Stock Debt – Bond Primary market: is a financial market in which new issues of a security, such as a  bond or a stock, are sold to initial buyers by the corporation or government agency  borrowing the funds Not very publicly known because its only open to investment banks Secondary market: is a financial market in which securities that have been  previously issued can be resold. Exchanges: where they meet for one central location, NASDAQ. Over the counter: selling and buying at different locations, sellers have an  inventory ready to issue.
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o Partakes in many small deals, smaller number of shares where you  can sell off the rest of an investment you may have. Maturity: Less than one year is money market, more than one is capital market. Money market instruments: US T-Bill, CoD’s Treasury Bills: issued in 1, 3, 6 month maturities CoD’s: straightforward Commercial paper: short term debt instrument
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M&B Notes - Lecture2 Measuringanationswealth:...

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