ECON 1000 Lecture Notes - Lecture 5: Loanable Funds, Suncor Energy, Financial System
10 Feb 2017
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Firm very profitable: shareholders enjoy benefits, bondholders just get interest stated. Once issued, shares are traded on stock exchange. Stock index measures overall level of stock prices. Institutions via which lenders can provide funds to borrowers. Smaller firms typically unable to issue stocks or bonds - take out loans. Use these to make loans to those borrowing. Also facilitate transactions because holders of deposits can use them to buy goods and services. Sell shares to public and uses proceeds to buy portfolio of various stocks and bonds. Allows those with small amounts of money to diversify. Also argued mutual funds give small investors access to the skills of professional money managers. Index funds typically beat those with active management. Chapter 8: savings, investment and the financial sector - Fi(cid:374)a(cid:374)(cid:272)ial s(cid:455)ste(cid:373) (cid:373)at(cid:272)hes o(cid:374)e perso(cid:374)"s sa(cid:448)i(cid:374)gs (cid:449)ith a(cid:374)other"s i(cid:374)(cid:448)est(cid:373)e(cid:374)t. Then relationship between macro variables and financial system. Can group financial institutions into financial markets and financial intermediaries.
