ACTSC371 Study Guide - Midterm Guide: Securitization, Hoarders
17 Feb 2015
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Causes: failure of regulation, excessive leverage, not following the precepts of investment analysis. Do not directly contribute to the productive capacity of the economy. Define the allocation of income or wealth among investors. Destroyed in the ordinary course of doing business. Information role: stock prices reflect investors" collective assessment of a firm"s current performance and future prospects (when a stock does not have much trades, it may not be reasonably valued. ) Consumption timing: allocate current consumption to periods that provide the greatest satisfaction by investing savings in financial assets during high earnings period. Saving involves investing, which means not spending all of the income on consumption. Financial intermediaries: connect security issuer and the ultimate owner of the. Banks, investment companies, insurance companies, credit unions, mutual funds, hedge funds, private equity groups. Pool the resources of small investors, lend considerable sums to large borrowers. Managing foreign exchange: canadian investors participate in foreign investment opportunities by trading on u. s. markets:
