RSM100Y1 Chapter 16: RSM100 CH16
Document Summary
Financial system- the mechanism by which money flows from savers to users. Households are net savers, while businesses and governments are net users. One of the most important factors to saving is a person"s age, as you get older you tend to save more. Funds can be transferred between savers and users in two ways: directly or indirectly; directly means the user raises the funds directly from the savers; indirectly means receiving funds through financial institutions. Securities- financial instruments that represent the obligations of the issuers to provide the purchasers with the expected stated returns on the funds invested or loaned. Securities take three categories: money market instruments, bonds, and shares. Short-term debt securities issued by governments, financial institutions, and corporations. Generally low-risk securities, examples are canadian treasury bills. Treasury bills are short-term securities issued by the canadian treasury. Commercial paper refers to securities sold by corporations. Certificate of deposit is a time deposit at a financial institution.
