Chapter 26

I would give this chapter a 2.5 out of 3 because of the vast amount of terms and vocabulary in it. While I have heard some of the terms before it will be important to keep them all straight. On the most basic level there are the savers and the borrowers which allows the economy to grow substantially by paring the two types together. Borrowers can raise money through either the financial market or financial intermediaries. In the market stock can be sold for part ownership in a company and bonds can be sold purely for the saver to collect interest on. Banks and mutual funds serve as a middle ground for savers to lend out their money. Banks pay interest to the savers and then charge more interest on borrowers. Mutual funds buy a collection of stocks for a saver. Generally the higher the risk savers are willing to undertake the greater the payout they can receive.