Financial Markets金融市场.pptVIP

Financial Markets Saving and Capital Formation Saving money makes economic growth possible One’s person savings can represent another person’s loan Savings make investments possible Financial Assets and the Financial System Consist of a network, including Savers Investors Financial institutions Work together to Transfer savings to investors Financial Assets and the Financial System Financial assets Claims on the property and the income of the borrower Open a Savings accounts Certificates of deposits Government bonds Corporate bonds Financial Assets and the Financial System Financial Intermediaries Financial institutions that bring together savers and lenders Commercial banks Savings and loan Asso. Savings bank Mutual savings banks Credit unions Life insurance companies Mutual funds Pension Funds Real Estate Investment Trust Finance Companies Circular flow of funds: shows how funds are transferred from savers to borrowers Any part of the economy can supply and borrow savings Largest Borrowers = Government and businesses Nonbank Financial Intermediaries Non-depository institutions that channel savings to borrowers Finance companies Life Insurance Mutual Funds Pension Funds Real Estate Investment Trust Investment Strategies and Financial Assets Basic Investment Considerations Risk: a situation in which the outcome is not certain but can be estimated Higher risk = higher rate of return Low risk = lower rate of return Basic Investment Considerations Investments depends on goals of the investor Consistent investment can yield large returns Avoid complex investments 401K Plan: tax deferred investment plan that acts as a personal pension fund for employees Bonds as Financial Assets Three main components The Coupon: stated interest on debt The Maturity: life of the bond The par value: principal or the total amount initially borrowed that must be repaid at maturity Prices are