Market Organization and Structure

Question 0

How to: Savers - move PV to FV

Investors - move PV$ to FV$, earn %

Answer 0

notes, certificates of deposit, bonds, stocks, mutual funds, real estate

Question 1

functioning financial system (save, borrow, raise equity capital, manage risk, exchange assets in spot markets, information-motivated trading)

Answer 1

Transaction costs. Capital resource allocation. Liquid. Analysts can value savings and investments. Regulated contracts. Valuable info.

Question 2

Loan transaction costs (process)

Answer 2

Arrange, monitor, collect

Question 3

Borrowers (loan expectations)

Answer 3

Expect to pay interest on that loan, or disbursements such as dividends and capital gains.

Question 4

Lower cost of borrowing

Answer 4

Pledge collateral

Question 5

How Credit bureaus/rating agencies promote borrowing

Answer 5

collect/disseminate info that lenders analyze

Question 6

How gov promotes borrowing

Answer 6

bankruptcy codes/courts that define/enforce borrower/lender rights.

Question 7

How/what Companies raise equity capital (funds) by issuing ownership interests

Answer 7

Corporate common stock or partnerships to move money.

Contributed capital entitles shareholders to company equity distributions.

Question 8

Using the financial system to manage risk

Answer 8

…