What Are Financial Markets/fin/370 Essay

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FIN/370 Week two individual assignment • 14-1, 14-2, 14-3, 14-4, 14-7 (Ch. 14) |14-1. |What are financial markets? What function do they perform? How would an economy be worse off without them? | | |Financial markets are those institutions and procedures that facilitate transactions in all types of financial | | |claims (securities). The corporation raises funds in the financial markets by selling securities. The corporation | | |receives cash in return-generating assets- news projects and the cash flow from those assets is then either | | |reinvested. | |14-2. |Define in a technical sense what we mean by financial intermediary. Give an example of your definition. Financial | | |intermediary is a financial institution such as a bank, credit union, insurance company which acts as the middleman| | |between those who want to lend and those who want to borrow. . An example would be in banking the bank borrows | | |money from the people that deposit money into their savings accounts the bank in return lends money to people who | | |borrow money from the bank collecting interest on money they lend out while the people who deposit money collect | | |little interest from the bank. | |14-3. |Distinguish between the money and capital markets. | | |Money market all institutions and procedures that facilitate transaction in short-term credit instruments. Capital | | |market all institutions and procedures that facilitate transactions in long-term financial
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