Category Archives: Key finance concepts

Classifying funds: the type of contract – is it equity or debt?

Another way to classify funds that are provided by a saver to an investor is whether they are in the form of debt or equity. These are the two main forms of contract through which one person or company can provide funding to another. Note that governments, which are very important actors in the financial system, can only… Continue Reading

Key financial concepts: securities

Securities are a very important and useful piece of financial technology, including bank notes, shares and bonds. They make possible a wide range of financial transactions and provide competition to the other main source of funding, banks. * A security is a certificate representing a contract between two or more people which promises to pay… Continue Reading

Key finance concepts: exchange rates

Exchange rates are among the most important macrofinancial prices, influencing many aspects of an economy. This post introduces exchange rates and their importance for macroeconomic adjustment * What is an exchange rate? An exchange rate is a ratio, the price of one currency relative to another. All prices are ratios, but normally they’re expressed in… Continue Reading