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LectureNote1 - LECTURE ONE Why Study Money, Banking, and...

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Unformatted text preview: LECTURE ONE Why Study Money, Banking, and Financial Markets? ECONOMICS 209 Professor Kevin Huang Vanderbilt University 1-1 What We Will Study • To examine the structure and operation of financial markets such as bond, stock and foreign exchange markets • To examine the structure and operation of financial institutions such as banks and insurance companies • To examine the role of money and the monetary authority in the economy 1-2 Financial Markets • Markets in which funds are transferred from people who have an excess of available funds to people who have a shortage of funds ¡ The bond market ¡ The stock market ¡ The foreign exchange market • A security (financial instrument) is a claim on the issuer’s future income or assets 1-3 The Bond Market and Interest Rates • A bond is a debt security that promises to make payments periodically for a specified period of time (maturity) • An interest rate is the cost of borrowing or the price paid for the rental of funds • There are many different bonds and thus...
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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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LectureNote1 - LECTURE ONE Why Study Money, Banking, and...

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