Chapter 11 Financial Markets. Saving and the Financial System Saving The act of not spending money Savings Dollar Amount from that non consumptions of.

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Presentation transcript:

Chapter 11 Financial Markets

Saving and the Financial System Saving The act of not spending money Savings Dollar Amount from that non consumptions of products

Saving and Economic Growth Savers and Financial Assets Number of Ways to Save Savings Accts CD’s (Certificates of Deposit) All known as financial assets Financial System operates in a circular flow Financial Intermediaries are the institutions tat lend the funds that savers provide

Types of Intermediaries Banks Credit Unions Life Insurance Companies Brokers

Non-Bank Financial Intermediaries Finance Companies, Life Insurance Brokers, Pension Funds Finance Company Specializes in directly making loans to consumers Life Insurance Companies Collects and can loan cash Premiums, collected for policies, can be loaned out at other ends Pension Funds Set up to collect and distribute Retirement Pension is the retirement payment received

Investments Basics We are looking for: Consistency Simplicity Risk Return Relationship Risk is the degree to which the outcome is uncertain but a probable outcome can be estimated Investment Objectives What are we trying to gain through the investment?