Econ 203
Course: Economics 203
monday - 3-3:50 tuesday - 4:30-5;20 wednesday - 9 - 9:50 thursday - 8:30 - 9:20
Optional tutorials - SS403
Ta's email uofcecon201203@gmail.com Get a scientific calculator for this course!
Final exam is a lot harder then the midterm
Class before the exam = questions we can ask him, he will do sample questions, sue – past midterm exams
Chapter 8: Saving, Investment and The Financial System:
The financial system consists of all those institutions in the economy that help to match one person’s saving with another person’s investment
Institutions that match borrowers with lenders
Saving and investment are key to an economy’s long term growth
When a country saves a large portion of its GDP, more resources are available for investment in capital, and higher capital raises a country’s productivity and living standard.
Financial institutions:
Financial Markets: The institutions through which a person who wants to save can directly supply funds to a person who wants to borrow
The bond market: Companies (or the government) issue bonds in order to raise money. The initial people buy the bonds. Debt financing (the company selling the bond are in debt to you), come with a term, either short or long term. A term is the length of time until the bond matures. Credit risk: There is a possibility that the company who issues the bond may not pay interest, or may not return your initial principle payment. The risk comes in that if the company goes bankrupt you lose that money. NOT talking about one individual owns a bond of a company, and sells them to another individual.
A bond is a certificate of indebtedness
Bonds come with a time and amount to be paid at maturity
Perpetuity – A bond that pays interest forever, but the principle amount is never repaid.
A failure to repay principle when the bond matures is called a default - borrowers can default on a bond by declaring bankruptcy.
When a risk of default is high,
monday - 3-3:50 tuesday - 4:30-5;20 wednesday - 9 - 9:50 thursday - 8:30 - 9:20
Optional tutorials - SS403
Ta's email uofcecon201203@gmail.com Get a scientific calculator for this course!
Final exam is a lot harder then the midterm
Class before the exam = questions we can ask him, he will do sample questions, sue – past midterm exams
Chapter 8: Saving, Investment and The Financial System:
The financial system consists of all those institutions in the economy that help to match one person’s saving with another person’s investment
Institutions that match borrowers with lenders
Saving and investment are key to an economy’s long term growth
When a country saves a large portion of its GDP, more resources are available for investment in capital, and higher capital raises a country’s productivity and living standard.
Financial institutions:
Financial Markets: The institutions through which a person who wants to save can directly supply funds to a person who wants to borrow
The bond market: Companies (or the government) issue bonds in order to raise money. The initial people buy the bonds. Debt financing (the company selling the bond are in debt to you), come with a term, either short or long term. A term is the length of time until the bond matures. Credit risk: There is a possibility that the company who issues the bond may not pay interest, or may not return your initial principle payment. The risk comes in that if the company goes bankrupt you lose that money. NOT talking about one individual owns a bond of a company, and sells them to another individual.
A bond is a certificate of indebtedness
Bonds come with a time and amount to be paid at maturity
Perpetuity – A bond that pays interest forever, but the principle amount is never repaid.
A failure to repay principle when the bond matures is called a default - borrowers can default on a bond by declaring bankruptcy.
When a risk of default is high,