Present Value - insurance companies). Basics of Debt...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Present Value From Last Time Banks is a generic term for all financial institutions which create money deposits. These include commercial banks, savings and loans, and credit unions. Financial intermediaries simply act as a sort of middle man. They raise funds from many small savers and invest these funds in some kind of way such as making loans or buying stocks. Contractual savings institutions allow people to save in a disciplined way for retirement (e.g. a pension fund) or to transfer the risk of financial hardship to someone else (e.g.
Background image of page 1

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

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: insurance companies). Basics of Debt Instruments debt Instruments promises by a borrower to repay principal plus interest to a lender principal amount of the loan interest fee for using the funds maturity date repayment is due Simple Loan E.g., a 2 year loan of $1000 at 10% interest Discount Bond With a discount bond, the borrower pays the lender the amount of the loan (face or par value) at maturity but receives less than the face value initially....
View Full Document

Page1 / 2

Present Value - insurance companies). Basics of Debt...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online