Econ Ch9 Financial Institutions

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Econ Ch9 Financial Institutions

  1. 1. Chapter Financial Institutions 9
  2. 2. Chapter Objectives <ul><li>Students will learn: </li></ul><ul><li>Basic functions of financial service institutions </li></ul><ul><li>Basic functions of financial intermediaries </li></ul><ul><li>Basic properties of stocks and bonds </li></ul>
  3. 3. Financial Service Institutions S A V E R S B O R R O W E R S Can you think of any other types of borrowers? Interest Interest Interest Interest
  4. 4. Business Growth <ul><li>Profits vs. Lending </li></ul><ul><li>Savings is investing </li></ul><ul><li>Capital investments = economic growth </li></ul>
  5. 5. Banking Products <ul><li>Keeping Money Safe (insurance, FDIC) </li></ul><ul><li>Transferring Funds (portability, access) </li></ul><ul><li>Loaning Money (interest, investing) </li></ul>
  6. 7. stocks and bonds Primary Market Secondary Market Securities Market OTC Market BONDS STOCKS
  7. 8. States of the Market Bull Market Bear Market
  8. 9. RISK <ul><li>Bear market = bigger risk </li></ul><ul><li>Mutual funds reduce risk </li></ul><ul><ul><li>Shares in a company that invests in stocks and bonds of other companies </li></ul></ul><ul><ul><li>Diversification reduces risk </li></ul></ul><ul><ul><li>Expert analysis and advice </li></ul></ul><ul><ul><li>Dividends </li></ul></ul>

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