17 - S(prv = Y T Tr C S(pub = T = G Tr The Bond Market a...

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S(prv) = Y – T + Tr – C S(pub) = T = G – Tr The Bond Market - a Bond is a certificate of indebtedness (bonds mean you are a creditor) The Stock Market - a stock is a claim to partial ownership in a firm (means you are an owner of the firm) Financial system – the group of institutions that helps match the saving of one person with the investment of another - Financial markets: institutions through which savers can directly provide funds to borrowers - Financial intermediaries: institutions through which savers can indirectly provide funds to borrowers – Examples o Banks: take deposits from people who want to save and use the deposits to make loans to people who want to borrow pay deposits interest on their deposits and charge borrowers slightly higher interest on their loans o Mutual funds – institutions that sell shares to the public and use the proveeds to buy portfolios of stocks and bonds (look at other governments, market trends, etc to allow people who are not experienced or who don’t
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17 - S(prv = Y T Tr C S(pub = T = G Tr The Bond Market a...

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