1. Do Now Activity:
If you were old enough to play and win the Powerball Jackpot, what would you do with the money?
How would you allocate your funds?
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2. OBJECTIVES:
Describe how investing contributes to the free enterprise system.
Explain how the financial system brings together savers and borrowers.
Describe the characteristics of other types of financial assets.
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3. Chapter 11
Financial Markets
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4. Section 1
Saving and Investing
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5. “Better safe than sorry!” “Nothing ventured, nothing gained!”
“Don’t put all of your eggs in one basket!”
“Look before you leap!”
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6. Why is studying for a test a type of investment?
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7. I. Investment
Act of redirecting resources from being consumed today, so that they may create benefits in the future.
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8. II. Investing & Free Enterprise
Investing is essential to the free enterprise system.
Promotes economic growth and wealth.
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9. Banks lend the funds to businesses.
A. How does it work?
People deposit their money in a savings account in a bank.
Banks lend the funds to businesses.
Businesses invest in new capital to make their businesses better.(products/jobs)
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10. III. The Financial System
Network of structures and mechanics that allows transfers of money between savers and borrowers.
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11. A. Financial Assets Claims on the property or income of a borrower.
When savers save, they obtain these documents (passbooks, monthly statements, certificates, etc.)as proof of their deposits.
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12. B. Flow of Savings & Investments
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13. IV. Financial Intermediaries
Saver and borrowers are linked through a variety of financial institutions.
They help channel funding between savers and borrowers.
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14. A. Financial Intermediaries
Banks, savings & loan associations, credit unions & finance companies (take deposits & lend money)
Mutual Funds (pools money of many investors)
Hedge Funds (private investment/risky/wealthy)
Life insurance (lend part of premiums collect)
Pension Funds (Retirement income)
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15. Financial Intermediaries
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16. A business that gets a business loan?
Saver or Borrower:
Person who purchases a CD?
A business that gets a business loan?
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