Econ215 Chapter 1&2

Econ215 Chapter 1&2 - Economics 215 Stocks, Bonds,...

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Economics 215 Stocks, Bonds, and Financial Markets
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These notes are based on Financial Markets and Institutions , 6 th Edition by Mishkin and Eaton. Although they follow the organization of the text, they are also supplemented with expanded coverage of concepts and examples.
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Part One Introduction
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Chapter 1 Motivation
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Why Study Financial Markets? To become rich? To protect self-interest? To understand economic principles? To discover policies which promote public welfare?
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Basic Terminology Asset : probable future economic benefits controlled by an entity as a result of past transactions or events. Fungibility : the property of a good whose individual units are capable of mutual substitution.
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Negotiable Instrument : a specialized type of contract for the payment of money that is unconditional and capable of transfer by negotiation. Security : a fungible, negotiable instrument representing financial value. Bond : a debt security that promises to make periodic payments for a specified time period.
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Interest : a fee paid on borrowed capital. Interest Rate : the interest as a percentage of the amount of capital. Corporation : a legal entity which has a separate legal personality from its members.
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Common Stock : a security that represents a share of ownership in a corporation. Preferred Stock
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This note was uploaded on 12/05/2011 for the course ECON 215 taught by Professor Clark during the Summer '11 term at Emory.

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Econ215 Chapter 1&2 - Economics 215 Stocks, Bonds,...

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