Chapter 05 - CHAPTER5 Financialmarkets 51 Process , it...

Info icon This preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon
    5-1 CHAPTER 5 Financial Markets and Institutions The Capital Allocation Process Financial markets Stock Market Efficiency
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
    5-2 The Capital Allocation  Process In a well-functioning economy, capital flows efficiently  from those who supply capital to those who demand  it. Suppliers of capital – individuals and institutions with  “excess funds”.  These groups are saving money and  looking for a rate of return on their investment. Demanders or users of capital – individuals and  institutions who need to raise funds to finance their  investment opportunities.  These groups are willing to  pay a rate of return on the capital they borrow.
Image of page 2
    5-3 How is capital transferred between  savers and borrowers? Direct transfers Investment banking  house Financial  intermediaries
Image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
    5-4 What is a market? A market is a venue where goods and  services are exchanged. A financial market is a place where  individuals and organizations wanting to  borrow funds are brought together with  those having a surplus of funds.
Image of page 4
    5-5 Types of financial markets Physical assets vs. Financial assets Physical: commodities, precious metals Financial: stock, bonds, derivatives Money vs. Capital
Image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 6
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern