A bond is a long term debt security, which can be issued by a government, company or even a charity. This post describes the main features of bonds. * A bond is a debt security for which the term (maturity) … Continued
Financial services are provided mainly in two ways: by banks and by markets. Here we outline the key features of financial markets * A market is a very general concept of any arrangement which brings together users for mutual advantage. … Continued
One of the three purposes of a financial system is to join savers to investors, to allow funds to flow from people who have a surplus to those who have a deficit (the others are to manage risk and to facilitate … Continued
There are two generic ways in which a company can raise long term funding, which we call capital: debt and equity. Combinations of these, called hybrid capital, are also possible but rare outside venture capital. Any economic agent, including individuals, … Continued
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 … Continued
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 … Continued
What exactly is liquidity? The word liquidity is used in many different ways, often confusingly. It’s important to keep clear the centrally important concept of what liquidity is: the ability to turn assets into money quickly and at low cost. … Continued