HIST 1402 Lecture Notes - Lecture 4: Foreign Exchange Market, Interest Rate Risk, Wire Transfer
Document Summary
Test 1 will be over chapters 1, 2, 3, & 4. Financial market is a market for financial securities. A financial asset is a legal contract that gives its owner a claim to payments, usually generated by a real asset. Examples include currency ($), stocks, bonds, bank deposit, bank loans, etc. Financial markets channel funds from savers to investors, thereby promoting economic efficiency. Market activity affects personal wealth, the behavior of business firms, and economy as a whole. Well-functioning financial markets such as the bond market, stock market, and foreign exchange market, are key factors in producing high economic growth. Debt markets, or bond markets, allow governments, corporations, and individuals to borrow to finance activities. The interest rate is the cost of borrowing. Companies initially sell stock in the primary market to raise money. But after that, the stock is traded among investors (secondary market). Foreign exchange market is where international currencies trade and exchange rates are set.
