TKM_Chapter_02

TKM_Chapter_02 - CHAPTER 2 FIRMS AND THE FINANCIAL MARKET...

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CHAPTER 2 FIRMS AND THE FINANCIAL MARKET This chapter provides an overview of U.S. financial markets. Financial markets consist of the institutions that facilitate the transfer of money from investors to companies and individuals. The three principal players in the financial markets are borrowers, savers (i.e., investors), and financial institutions (i.e., intermediaries). There is a wide variety of financial institutions that make up our financial markets, including commercial banks, financial services corporations, insurance companies, investment banks, investment companies, mutual funds and exchange traded funds, hedge funds, and private equity firms. The purpose of each of these institutions is to bring borrowers and investors together. Borrowers and investors are linked together through the buying and selling of a variety of securities that are traded on financial markets. While there are innumerable types of financial instruments traded on financial markets, most are some form of debt or equity security. LEARNING OBJECTIVES 2-1. Describe the structure and functions of financial markets. 2-2. Distinguish between commercial banks and other financial institutions in the financial marketplace. 2-3. Describe the different securities markets for bonds and stock. CHAPTER ORGANIZATION 2.1 THE BASIC STRUCTURE OF U.S. FINANCIAL MARKETS A. A financial market is any place where money and credit are exchanged. B. The three principal sets of players in financial markets are borrowers, savers (investors), and financial institutions (intermediaries). 1. Borrowers : Individuals and businesses that need money to finance their purchases or investments.
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This note was uploaded on 09/17/2011 for the course FIN 3403 taught by Professor Keys during the Spring '08 term at FIU.

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TKM_Chapter_02 - CHAPTER 2 FIRMS AND THE FINANCIAL MARKET...

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