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LectureNote2 - LECTURE TWO Overview of the Financial System...

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LECTURE TWO Overview of the Financial System ECONOMICS 209 Professor Kevin Huang Vanderbilt University
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2-1 Function of Financial Markets Play an essential role in channeling funds from economic players that have saved surplus funds to those that have a shortage of funds Promotes economic efficiency by generating an efficient allocation of resources, which increases production Directly improve the well-being of consumers by allowing them to time purchases better
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2-2
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2-3 Structure of Financial Markets Debt and Equity Markets Primary and Secondary Markets ± Investment Banks underwrite securities in primary markets ± Brokers and dealers work in secondary markets Exchanges and Over-the-Counter (OTC) Markets Money and Capital Markets ± Money markets deal in short-term debt instruments ± Capital markets deal in longer-term debt and equity instruments
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2-4
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2-5
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2-6 Internationalization of Financial Markets Foreign Bonds—sold in a foreign country and denominated in that country’s currency
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This note was uploaded on 04/07/2008 for the course ECON 209 taught by Professor Professor during the Spring '08 term at Vanderbilt.

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LectureNote2 - LECTURE TWO Overview of the Financial System...

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