1) Money Serves as a Medium of Exchange:
- A medium of exchange is the property
of money that exchange is made through the use of money.
2) Money Serves as a Unit of Account:
- Unit of account is the property of
money that prices are quoted in terms of money.
- Money provides a convenient measuring
rod when prices for all goods are quoted in money terms.
- Money can be used to compare the
relative value of goods, making it easier to carry out economic transactions.
3) Money Serves as a Store of Value:
- Store of value is the property of
money that it preserves value until it is used in an exchange.
- From the time you receive a payment
until the time you make payment; you can use money to store value.
# What borrowers
want?
- Long term loan
- Minimum Interest
- Minimum risk and transaction cost
# What lender wants?
- Maximum liquidity
- Maximum return
- Maximum risk and transaction costs
# Money Market- The
money market is a component of the financial markets for assets involved in short-term
borrowing and lending with original maturities of one year or shorter time
frames. Trading in the money markets involves Treasury bills, commercial paper,
bankers' acceptances, certificates of deposit, federal funds, and short-lived
mortgage-backed and asset-backed securities. It provides liquidity funding for
the global financial system.
# Net worth - The
amount by which assets exceed liabilities is called net worth. This term can be
applied to companies and individuals or is the difference between assets and
liabilities.
(Source-Internet)
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