ECON 2035 Chapter : Ch 1
Document Summary
These are important for understanding business cycle and nancial crises. A bond is a debt security that promises to make payments periodically for a speci ed period of. An interest rate is the cost of borrowing or the price paid for the rental of funds. There are di erent types of interest rates, depending on maturity and riskiness of the bond. Behavior of di erent interest rates: Common stock represents a share of ownership in a corporabon. A share of stock is a claim on the earnings and assets of the corporabon: foreign exchange market. The foreign exchange market is where funds are converted from one currency into another. The foreign exchange rate is the price of one currency in terms of another currency. Japanese yen / us dollar ( /$) Financial insbtubons and banking: financial intermediaries: insbtubons that borrow funds from people who have saved and make loans to other people: Banks: accept deposits and make loans.
