Chapter 1 - Introduction Everyfinancialtransactionhasastory

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1 Chapter One Introduction Every financial transaction has a story There is a complex web of interdependent institutions and markets making up the foundation of daily financial transaction foundation of daily financial transactions The Six Parts of the Financial System The Five Core Principles of Money and Banking 1-2 Six Parts of the Financial System 1. Money To pay for purchases and store wealth 2. Financial Instruments To transfer resources from savers to investors and to transfer risk to those best equipped to bear it. 3. Financial Markets To Buy and sell financial instruments 4. Financial Institutions To provide access to financial markets, collect information & provide services 5. Regulatory Agencies To provide oversight for financial system 6. Central Banks To monitor financial Institutions and stabilize the economy 1-3 Six Parts of the Financial System 1. Money Has changed from gold/silver coins to paper currency to electronic funds Cash can be obtained from an ATM any where in the world. Bills are paid and transactions are checked online. 1-4 Six Parts of the Financial System 2. Financial instruments Buying and selling individuals stocks used to be only for the wealthy. Today we have mutual funds and other stocks available through banks or online. Putting together a portfolio is open to everyone. 1-5 Six Parts of the Financial System 3. Financial Markets Once located in coffeehouses and taverns.
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This note was uploaded on 08/23/2011 for the course ECON 3223 taught by Professor Robertpennington during the Spring '11 term at University of Central Florida.

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Chapter 1 - Introduction Everyfinancialtransactionhasastory

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