Financial Markets

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Section 1
-Saving and Investing

Investment is the act of redirecting resources from being consumed today so that they create benefits in the future.

The Financial System:
Network of structures and mechanisms that allows transfer of money between savers and borrowers. Financial assets are like securities
When people save, they are, in essence, lending funds to others weather they put cash in a savings account, purchase a certificate of deposit, or buy a corporate of government bond, savers obtain a document that confirms their purchase or deposit.

Financial Intermediaries-
Institutions that help channel funds from savers to burrowers.

Liquidity, Return, and Risk:
Return is the money an investor receives above and beyond the sum of money above and beyond the sum of money that has been invested.

Section 3
-Buying Stock
Stock is issued in portions known as shares. By selling shares of stock, corporations raise money to start, run, & expand their businesses.

-Benefits of Buying Stock
Dividends- many corporations pay out part of their profits as dividends to their stock holders. Usually paid four times a year. Capital Gains- A second way an investor can earn a profit is to sell stock for more than he or she paid for it.

Types of Stock
Income Stock- By paying dividends, this stock provides investors with income. Growth Stock- Pays few or no dividends.
Common Stock- Investors who buy common stock are usually voting owners of the company. Preferred Stock- Investors who buy preferred stock are usually non-voting owners of the company.

Stock Split- Means that each single share of stock splits into more than one share Stockbroker- A person who links buyers and sellers of stock
Brokerage IRMS- A business that specializes in trading stock

How are stocks traded?
-Stock Exchanges- A market for buying and selling stock
-They act as secondary markets for stocks...
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