RSM100Y1 Chapter Notes - Chapter 16: Canadian Imperial Bank Of Commerce, Manulife, Insider Trading
Document Summary
Financial system: the mechanism by which money flows from savers to users. Households are generally net savers (save more money than they use). Businesses and governments are net users (use more funds than they save). Net worth: the difference between what you own and what you owe. Funds can be transferred between savers and users in two ways: directly. The user raises the needed funds directly from savers (i. e. selling shares to investors who are the savers): indirectly. Using financial institutions to obtain funds (i. e. saver deposits money in a bank account that earns interest and the user takes out a loan from the bank). 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. There are three categories of securities: money market instruments. Short-term debt securities that can be issued by: Governments - treasury bills which mature in 30, 90,
