FIN 010 Lecture Notes - Lecture 6: Santa Barbara City College
Document Summary
Financial markets and financial institutions (financial system in australia basics) The financial system allows both lenders and borrowers to trade-off between the different attributes to achieve their desired portfolio structure needs. Wealth of society is determined by the productive capacity of its economy the goods and services its members can create. The capacity is a function of the real assets of the economy: That can be used to produce goods and service. Real assets generate net cash flows within the economy. Historically no more than a sheet of paper. Do not contribute directly to the productive capacity of the economy. Financial assets are the means that investors hold their claims on real assets. Claims to the income generated by real assets. Real assets generate net cash flows to the economy. Financial assets define the allocations of the cash flows. Financial markets the markets in which financial assets are bought and sold. Financial markets can be classified according to:
