ECON 3430 Lecture Notes - Lecture 2: Toronto Stock Exchange, Corporate Bond, Investment Banking

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mag0sea

10 Feb 2017

School

York University

Department

Economics

Course

ECON 3430

Professor

Brenda Spotton- Visano

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ECON 3430 Full Course Notes

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By the end of this chapter, you will understand: the structure of financial markets. International dimensions of financial markets: various types of financial market instruments, various types of financial intermediaries. How transaction costs, risk sharing, information matter: reasons for and types of financial market regulations. Channel funds from economic players that have surplus funds to those that have a shortage of funds. A contract between a borrower (who issues the bond) and lender (who owns it) Regularly payments until maturity (short-term, < 1 year, intermediate-term, 1-10 years, and long-term, >10 years. Previously issued securities can be bought and sold. Brokers match buyers and sellers with each other. Dealers offer to buy and sell securities at stated prices. Two main ways to organize a secondary market: Buyers and sellers meet in one central location. Dealers have inventory, ready to buy/sell at stated prices. Many stocks are traded otc, but most are on exchanges. Canadian government bond market is an otc market.

Related Questions

part 1

1. Why are bond markets important?

2. Why are stock markets important?

3. Why are banks important?

4. What aspects of the economy are affected by the money supply?

5. What are the four phases of a business cycle? How does money supply affect business

cycles?

6. What is the relationship between money supply growth and inflation?

7. What is monetary policy? What is fiscal policy?

8. What is the foreign exchange market?

9. How does an appreciation of a currency affect the economy?

10. How does a depreciation of a currency affect an economy?

part 2

1. What are the two components of a financial system? What is direct finance? Indirect

finance?

2. What is the role of financial markets?

3. Explain the following classifications of financial markets

a. Debt and. equity markets

b. Primary and secondary markets

c. Exchanges and over-the-counter markets

d. Money and capital markets

4. List and briefly explain each money market instrument.

5. List the capital market instruments.

6. Explain why financial intermediaries play an important role in the economy (address the

following: transactions costs, risk sharing, information costs, and economies of scope).

7. What is asymmetric information? What are the two problems that arise when there is

asymmetric information in the financial system?

8. Explain the adverse selection and moral hazard problems that are a result of asymmetric

information.

9. What are the different types of financial intermediaries in the U.S. economy?

10. Which financial intermediaries are classified as depository institutions (or banks)?

11. What are the two main reasons why the government regulates the financial system?

12. What are the different types of financial regulations implemented by the government in

the U.S.?

ECON 3430 Lecture Notes - Lecture 2: Toronto Stock Exchange, Corporate Bond, Investment Banking

ECON 3430 Full Course Notes

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