Chapter 3FinancialInstruments,FinancialMarketsand FinancialInstitutionsMcGraw-Hil/rwinCopyright 2006byTheMcGraw-Hill Companies,Inc.All rights reserved
McGraw-Hill/Irwin Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 3 Financial Instruments, Financial Markets, and Financial Institutions
CONTENS083.1 Introduction:IndirectandDirectFinance3.2FinancialInstruments3.3FinancialMarkets3.4FinancialInstitutions3-2
3-2 CONTENS 3.1 Introduction: Indirect and Direct Finance 3.2 Financial Instruments 3.3 Financial Markets 3.4 Financial Institutions
3.1 Introduction: Indirect andODirectFinanceIndirect Finance An Institution stands between lender andborrower.DirectFinanceBorrowers and lenders deal directly with eachother.3-3
3-3 3.1 Introduction: Indirect and Direct Finance Indirect Finance • An Institution stands between lender and borrower. Direct Finance • Borrowers and lenders deal directly with each other
Financial and EconomicDevelopmentFigure3.1 FinancialandEconomicDevelopmentFinancial development is measured by the commonly used ratio of broadly definedmoneyto GDP.Economicdevelopment ismeasured byreal GDPper capita25000Correlation=0.6220000HongKong1500010000KoreaMalaysia5000'ChinaO050150100200250Financial Market Development3-4
3-4 Financial and Economic Development
CFinancial Instrumentsd1. DefinitionA financial instrument is the writtenlegal obligation of oneparty totransfer something of value-usually money-to another party atsome future date, under certainconditions,such as stocks,loansorinsurance。3-5
3-5 Financial Instruments • 1. Definition • A financial instrument is the written legal obligation of one party to transfer something of value – usually money – to another party at some future date, under certain conditions, such as stocks, loans, or insurance