Exam summary - all chapters

Summary Financial Markets and Institutions 10 th Global Edition Exam summary - all chapters (To the point, no blabla) Financial Markets and Institutions 10 th Global Edition from 2023 Frederic Mishkin

9781292459547 

Pages book: 684

This summary: 40 (extra pages are test questions and concepts)

• 88 common exam questions and answers (beginner-level –

answers separate)

• 55 key core concepts explained 1 / 5

Summary Financial Markets and Institutions 10 th Global Edition 2 / 5

Summary Financial Markets and Institutions 10 th Global Edition 3 / 5

Summary Financial Markets and Institutions 10 th Global Edition

Part 1: Introduction

Security A security is a claim on the issuer’s future income or assets (any financial claim or piece of property that is subject to ownership). A bond is a debt security that promises to make payments periodically for a specified period of time. An interest rate is the cost of borrowing or the price paid for the rental of funds. High interest rates can stimulate you to save more and spend (borrow) less.Common stock A common stock represents a share (aandeel) of ownership in a corporation. It is a security that is a claim on the earnings and assets of the corporation. Issuing stock and selling it to the public is a way for corporations to raise funds to finance their activities. The stock market is also an important factor in business investment decisions, because the price of shares affects the amount of funds that can be raised by selling newly issues stock to finance investment spending. A higher price for a firm’s shares means that it can raise a larger amount of funds, which can be used to buy production facilities and equipment.Foreign exchange market For funds to be transferred from one country to another, they have to be converted from the currency in the country of origin into the currency of the country they are going to. The foreign exchange market is where this conversion takes place. This is also the place where the foreign exchange rate is determined. The foreign exchange rate is very important for the public and business.A strong dollar means that US goods exported abroad will cost more in foreign countries, hence foreigners will buy less of them, and vice versa.If you wanted to make a loan to IBM or General Motors, you would not go directly to the president of that company. Instead, you lend to such companies indirect through financial intermediaries, institutions such as commercial banks, savings and loan associations, mutual savings banks, credit unions, insurance companies, mutual funds, pension funds, and finance companies that borrow funds from people who have saved and in turn make loans to others.The tremendous increase in capital flows between countries means that the international financial system has a growing impact on domestic economies. 4 / 5