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Chapter 17 18 - Chapter 17/18 Thursday 6:44 PM...

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Financial system: process by which money flows from savers to users - Savers Users Financial Institutions Financial Markets Financial System - Savings is a function of many variables. - Funds can be transferred between users and savers directly or indirectly. - The Financial System/ Financial instruments - Business and governments Obligations on the part of the issuer - Money market instruments - Bonds sold by the U.S. Department of the Treasury. Government Bonds Revenue bonds are used toward a project that will produce revenue, General Obligation Bonds are not. Bonds issued by state or local governments Municipal Bonds Price is determined by risk and interest rate. Standard & Poor’s (S&P) Moody’s Several firms rate bonds Investment-grade Speculative/Junk Bond Ratings Bonds - Vote on major company decisions Cash dividends Price appreciation Common stock ownership claims in corporations. Preferred stock stockholders with preference in the payment of dividends.
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