logging in or signing up Saving, Investment, and the Financial Sy dpsingh86 Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 388 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: October 27, 2009 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... By: tenforten (18 month(s) ago) This looks like a good basic approach to give students a general understanding of this marketplace. I would like to be able to download this presentation if possible Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Saving, Investment, and the Financial System : Saving, Investment, and the Financial System Chapter 26 Copyright © 2001 by Harcourt, Inc.All rights reserved. Requests for permission to make copies of any part of thework should be mailed to: Permissions Department, Harcourt College Publishers,6277 Sea Harbor Drive, Orlando, Florida 32887-6777. The Financial System : The Financial System The financial system consists of institutions that help to match one person’s saving with another person’s investment. It moves the economy’s scarce resources from savers to borrowers. The financial system is made up of institutions(Markets and Intermediaries) Financial Institutions in the U.S. Economy : Financial Institutions in the U.S. Economy Financial Markets Stock Market Bond Market Financial Intermediaries Banks Mutual Funds Other Financial Institutions : Other Financial Institutions Credit unions Pension funds Insurance companies Loan sharks The Bond Market : The Bond Market A bond is a certificate of indebtedness that specifies obligations of the borrower to the holder of the bond. Characteristics of a Bond : Characteristics of a Bond Term: The length of time until the bond matures. Credit Risk: The probability that the borrower will fail to pay some of the interest or principal. Tax Treatment: The way in which the tax laws treat the interest on the bond. Municipal bonds are federal tax exempt. Slide 7: Stock Market Basics What is Stock? A stock is a tradable security that a firm issues to certify that the stockholder owns a share of the firm. Figure 19.1 shows an example of a stock certificate. The Stock Market : Stock represents ownership in a firm and is therefore, a claim to the profits that the firm makes. The sale of stock to raise money is called equity financing. Compared to bonds, stocks offer both higher risk and potentially higher returns. The Stock Market The Stock Market : The Stock Market The most important stock exchanges in the United States are the New York Stock Exchange, the American Stock Exchange, and NASDAQ. The Stock Market : The Stock Market Most newspaper stock tables provide the following information: Price (of a share) Volume (number of shares sold) Dividend (profits paid to stockholders) Price-earnings ratio Stock Market Basics : Stock Market Basics Reading the Stock Market Report Figure 19.2 in the textbook shows a part of a page from of the Wall Street Journal. The Market for Loanable Funds : The Market for Loanable Funds Loanable funds refers to all income that people have chosen to save and lend out, rather than use for their own consumption. Slide 13: Loanable Funds (in billions of dollars) 0 Interest Rate Market for Loanable Funds... Government Policies That Affect Saving and Investment : Government Policies That Affect Saving and Investment Taxes and saving Taxes and investment Government budget deficits An Increase in the Supply of Loanable Funds... : An Increase in the Supply of Loanable Funds... Loanable Funds (in billions of dollars) 0 5% Supply, S1 $1,200 Demand Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. An Increase in the Demand for Loanable Funds... : An Increase in the Demand for Loanable Funds... Loanable Funds (in billions of dollars) 0 5% $1,200 Supply Demand, D1 Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Government Budget Deficits and Surpluses : Government Budget Deficits and Surpluses When the government spends more than it receives in tax revenues, the short fall is called the budget deficit. For 2003, the budget deficit is $307 billion The accumulation of past budget deficits is called the government debt. For 2003, the total debt is 6.7 trillion. Government Budget Deficits and Surpluses : Government Budget Deficits and Surpluses Government borrowing to finance its budget deficit reduces the supply of loanable funds available to finance investment by households and firms. This fall in investment is referred to as crowding out. The deficit borrowing crowds out private borrowers who are trying to finance investments. The Effect of a Government Budget Deficit... : The Effect of a Government Budget Deficit... Loanable Funds (in billions of dollars) 0 $1,200 Supply, S1 Demand 5% Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. 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Saving, Investment, and the Financial Sy dpsingh86 Download Post to : URL : Related Presentations : Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Uploaded from authorPOINT lite Insert YouTube videos in PowerPont slides with aS Desktop Copy embed code: (To copy code, click on the text box) Embed: URL: Thumbnail: WordPress Embed Customize Embed The presentation is successfully added In Your Favorites. Views: 388 Category: Education License: All Rights Reserved Like it (0) Dislike it (0) Added: October 27, 2009 This Presentation is Public Favorites: 0 Presentation Description No description available. Comments Posting comment... By: tenforten (18 month(s) ago) This looks like a good basic approach to give students a general understanding of this marketplace. I would like to be able to download this presentation if possible Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Saving, Investment, and the Financial System : Saving, Investment, and the Financial System Chapter 26 Copyright © 2001 by Harcourt, Inc.All rights reserved. Requests for permission to make copies of any part of thework should be mailed to: Permissions Department, Harcourt College Publishers,6277 Sea Harbor Drive, Orlando, Florida 32887-6777. The Financial System : The Financial System The financial system consists of institutions that help to match one person’s saving with another person’s investment. It moves the economy’s scarce resources from savers to borrowers. The financial system is made up of institutions(Markets and Intermediaries) Financial Institutions in the U.S. Economy : Financial Institutions in the U.S. Economy Financial Markets Stock Market Bond Market Financial Intermediaries Banks Mutual Funds Other Financial Institutions : Other Financial Institutions Credit unions Pension funds Insurance companies Loan sharks The Bond Market : The Bond Market A bond is a certificate of indebtedness that specifies obligations of the borrower to the holder of the bond. Characteristics of a Bond : Characteristics of a Bond Term: The length of time until the bond matures. Credit Risk: The probability that the borrower will fail to pay some of the interest or principal. Tax Treatment: The way in which the tax laws treat the interest on the bond. Municipal bonds are federal tax exempt. Slide 7: Stock Market Basics What is Stock? A stock is a tradable security that a firm issues to certify that the stockholder owns a share of the firm. Figure 19.1 shows an example of a stock certificate. The Stock Market : Stock represents ownership in a firm and is therefore, a claim to the profits that the firm makes. The sale of stock to raise money is called equity financing. Compared to bonds, stocks offer both higher risk and potentially higher returns. The Stock Market The Stock Market : The Stock Market The most important stock exchanges in the United States are the New York Stock Exchange, the American Stock Exchange, and NASDAQ. The Stock Market : The Stock Market Most newspaper stock tables provide the following information: Price (of a share) Volume (number of shares sold) Dividend (profits paid to stockholders) Price-earnings ratio Stock Market Basics : Stock Market Basics Reading the Stock Market Report Figure 19.2 in the textbook shows a part of a page from of the Wall Street Journal. The Market for Loanable Funds : The Market for Loanable Funds Loanable funds refers to all income that people have chosen to save and lend out, rather than use for their own consumption. Slide 13: Loanable Funds (in billions of dollars) 0 Interest Rate Market for Loanable Funds... Government Policies That Affect Saving and Investment : Government Policies That Affect Saving and Investment Taxes and saving Taxes and investment Government budget deficits An Increase in the Supply of Loanable Funds... : An Increase in the Supply of Loanable Funds... Loanable Funds (in billions of dollars) 0 5% Supply, S1 $1,200 Demand Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. An Increase in the Demand for Loanable Funds... : An Increase in the Demand for Loanable Funds... Loanable Funds (in billions of dollars) 0 5% $1,200 Supply Demand, D1 Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc. Government Budget Deficits and Surpluses : Government Budget Deficits and Surpluses When the government spends more than it receives in tax revenues, the short fall is called the budget deficit. For 2003, the budget deficit is $307 billion The accumulation of past budget deficits is called the government debt. For 2003, the total debt is 6.7 trillion. Government Budget Deficits and Surpluses : Government Budget Deficits and Surpluses Government borrowing to finance its budget deficit reduces the supply of loanable funds available to finance investment by households and firms. This fall in investment is referred to as crowding out. The deficit borrowing crowds out private borrowers who are trying to finance investments. The Effect of a Government Budget Deficit... : The Effect of a Government Budget Deficit... Loanable Funds (in billions of dollars) 0 $1,200 Supply, S1 Demand 5% Harcourt, Inc. items and derived items copyright © 2001 by Harcourt, Inc.