AFM121 Chapter Notes - Chapter 1: United States Treasury Security, Fiscal Policy, Growth Capital

• School: University of Waterloo
• Department: Accounting & Financial Management
• Course: AFM121
• Professor: John D' Amato

Document Summary

Financial markets transfer wealth from those who have extra wealth to those who need capital: drive economic growth by transforming savings into investments, three components of wealth transfer, financial instruments, financial markets, financial intermediaries. Purchase of real assets that directly generate wealth e. g. land, buildings, human capital, etc. Purchases of financial capital (bonds, stocks, treasury bills) Issuers of financial capital invest funds into real assets to generate wealth: capital tends to flow towards attractive economic environments, capital flows in and out of countries in response to various factors such as. Fiscal policy: the political environment, economic trends, monetary policy. Labour force characteristics: availability of capital helps a nation promote economic output, productivity, innovations, improve the competitiveness of a country. Sources of capital: capital is supplied by both retail and institutional investors, retail investors invest for themselves. Institutions are organizations that by and sell financial assets to serve its shareholders, members, etc.