Chapter 1 - 2.Risk Requires Compensation In a world of...

Info iconThis preview shows pages 1–4. Sign up to view the full content.

View Full Document Right Arrow Icon
Five Parts of the Financial System 1. Money To pay for purchases and store wealth 2. Financial Instruments To transfer wealth from savers to investors and to transfer risk to those best equipped to bear it. 1-1 Chapter 1
Background image of page 1

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

View Full DocumentRight Arrow Icon
Five Parts of the Financial System 3. Financial Markets Buy and sell financial instruments 4. Financial Institutions. Provide access to financial markets 5. Central Banks Monitor financial Institutions and stabilize the Economy 1-2
Background image of page 2
Five Core Principles of Money and Banking 1.Time has Value Time affects the value of financial instruments. Interest payments exist because of time properties of financial instruments
Background image of page 3

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

View Full DocumentRight Arrow Icon
Background image of page 4
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 2.Risk Requires Compensation In a world of uncertainty, individuals will accept risk only if they are compensated in some form. 1-3 Five Core Principles of Money and Banking 3.Information is the basis for decisions The collection and processing of information is the basis of foundation of the financial system. 4.Markets set prices and allocate resources. The places where buyers and sellers meet are the core of the economic system 5.Stability improves welfare. A stable economy reduces risk and improves everyone's welfare. 1-4...
View Full Document

This note was uploaded on 02/12/2012 for the course ECON 101 taught by Professor Abrams during the Spring '11 term at Adams State University.

Page1 / 4

Chapter 1 - 2.Risk Requires Compensation In a world of...

This preview shows document pages 1 - 4. Sign up to view the full document.

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