Financial System

Financial System - Higher risk and higher return Prices...

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THE FINANCIAL SYSTEM
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2 Financial Institutions Financial markets : institutions through which savers can directly provide funds to borrowers: The Bond Market (Debt Finance) a bond is a certificate of indebtedness that specifies a date of maturity and a rate of interest. Issued by companies, as well as by government Characteristics – term, credit risk, tax treatment The Stock Market (Equity Finance) a stock is a claim to partial ownership in a firm.
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Unformatted text preview: Higher risk and higher return Prices reflect expected profitability Stock indices – DJIA and S&P 500 3 Financial Institutions 4 Financial Institutions Financial intermediaries : institutions through which savers can indirectly provide funds to borrowers. Examples: Banks Mutual funds – institutions that sell shares to the public and use the proceeds to buy portfolios of stocks and bonds Diversity Professional management...
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Financial System - Higher risk and higher return Prices...

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