ECON-3076EL Lecture Notes - Lecture 10: United States Treasury Security, Corporate Bond, Over-The-Counter (Finance)
28 Feb 2017
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Document Summary
Interest rate differentials; the difference in interest paid to interest charged. Bank services; credit cards, debit card, account fees, services provided. Financial system = financial markets + financial institutions. Financial intermediation = savings investors (funds real investments) Financial assets and real assets in the economy. Base money t-bills govt corp. stocks real machinery. Above shown as most liquid less liquid less risk more risk. Governments are more stable therefore they are more able to pay debt back. Able to borrow from other international financial institutions. Taxation power to earn more and pay debts. When the financial system is working: savings investments = financial intermediation. Transfer of established funds = no growth in the economy. Transfer of funds to induce new production = growth in the economy. Three financial markets: bond market, long term, stock market, long term, money market, short term. Difference the bank earns between interest paid on deposits and interest earned from loans.
