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Get free lecture slides on the topics of "Introducing the Financial System" and "Tools of Finance" from Boundless Teaching Platform. Customize and share these slides to engage your students effectively.

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  1. Boundless Lecture Slides Available on the Boundless Teaching Platform Free to share, print, make copies and changes. Get yours at www.boundless.com

  2. Using Boundless Presentations Boundless Teaching Platform Boundless empowers educators to engage their students with affordable, customizable textbooks and intuitive teaching tools. The free Boundless Teaching Platform gives educators the ability to customize textbooks in more than 20 subjects that align to hundreds of popular titles. Get started by using high quality Boundless books, or make switching to our platform easier by building from Boundless content pre-organized to match the assigned textbook. This platform gives educators the tools they need to assign readings and assessments, monitor student activity, and lead their classes with pre-made teaching resources. Get started now at: • The Appendix The appendix is for you to use to add depth and breadth to your lectures. You can simply drag and drop slides from the appendix into the main presentation to make for a richer lecture experience. http://boundless.com/teaching-platform • Free to edit, share, and copy Feel free to edit, share, and make as many copies of the Boundless presentations as you like. We encourage you to take these presentations and make them your own. If you have any questions or problems please email: educators@boundless.com Free to share, print, make copies and changes. Get yours at www.boundless.com

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  4. Introducing the Financial System The Financial System Tools of Finance ] The Financial System Free to share, print, make copies and changes. Get yours at www.boundless.com

  5. The Financial System > Introducing the Financial System Introducing the Financial System • Institutions, Markets, and Intermediaries • Role in Matching Savings and Investment Spending • Role in Providing a Market for Loanable Funds Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/economics/textbooks/boundless-economics-textbook/the-financial-system-29/introducing-the-financial-system-121/

  6. The Financial System > Tools of Finance Tools of Finance • Present Value and the Time Value of Money • Measuring and Managing Risk • The Value of Diversification • The Relationship Between Risk and Return and the Security Market Line Free to share, print, make copies and changes. Get yours at www.boundless.com www.boundless.com/economics/textbooks/boundless-economics-textbook/the-financial-system-29/tools-of-finance-122/

  7. Appendix Free to share, print, make copies and changes. Get yours at www.boundless.com

  8. The Financial System Key terms • asset clasA group of economic resources sharing similar characteristics, such as riskiness and return. • capital asset pricing modelUsed to determine the required rate of return of an asset taking into account an asset's sensitivity to non-diversifiable risk (also known as systematic risk or market risk). • financial intermediaryA financial institution that connects surplus and deficit agents. • loanable fundsMoney available to be issued as debt. • non-systematic riskRisk that is unique to a specific company; can be reduced through diversification. • poolinggrouping together of various resources or assets • present valueThe value of an asset in today's dollars after adjusting for an increase in the asset values as a result of interest earned during the period. • prospectusA document, distributed to prospective members, investors, buyers, or participants, which describes an institution (such as a university), a publication, or a business and what it has to offer. • real interest ratesThe rate of interest an investor expects to receive after allowing for inflation. • risk premiumThe minimum amount of money by which the expected return on a risky asset must exceed the known return on a risk-free asset • risk premiumThe minimum amount of money by which the expected return on a risky asset must exceed the known return on a risk-free asset • security market lineA line representing the relationship between expected return and systematic risk; thus a graphical representation of the capital asset pricing model. Free to share, print, make copies and changes. Get yours at www.boundless.com

  9. The Financial System • systematic riskThe risk associated with an asset that is correlated with the risk of asset markets generally, often measured as its beta. • time horizonA fixed point of time in the future where certain processes will be evaluated or assumed to end. • time value of moneyThe principle that a certain currency amount of money today has a different buying power (value) than the same currency amount of money in the future. Free to share, print, make copies and changes. Get yours at www.boundless.com

  10. The Financial System Bonds are a type of savings Savings are used to fund investments, where investments are defined as expenditures on factory plants, equipment and homes. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia.CC BY-SAhttp://upload.wikimedia.org/wikipedia/commons/thumb/5/58/EE_Savings_Bond.jpg/250px-EE_Savings_Bond.jpgView on Boundless.com

  11. The Financial System Money Assuming a 5% interest rate, $100 invested today will be worth $105 in one year ($100 multiplied by 1.05). Conversely, $100 received one year from now is only worth $95.24 today ($100 divided by 1.05), assuming a 5% interest rate. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia.CC BY-SAhttp://upload.wikimedia.org/wikipedia/en/f/fa/Stacks_of_money.jpgView on Boundless.com

  12. The Financial System Security market line The security market line depicts the the return on a security relative to its own risk. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia.CC BY-SAhttp://upload.wikimedia.org/wikipedia/en/f/f3/SML-chart.pngView on Boundless.com

  13. The Financial System Return expectations are based on risk analysis In finance and economics, as depicted in the graph above of the capital asset pricing model, risk is evaluated to set the boundary for acceptable return. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia.CC BY-SAhttp://upload.wikimedia.org/wikipedia/en/d/d9/SecMktLine.pngView on Boundless.com

  14. The Financial System Banks are the most common financial intermediaries Banks convert deposits to loans and thereby increase access to capital by serving as a financial intermediary between savers and borrowers. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia.CC BY-SAhttp://upload.wikimedia.org/wikipedia/commons/thumb/9/9a/National_Bank_of_Washington_301_7th_Street,_NW_in_Washington,_D.C.JPG/220px-National_Bank_of_Washington_301_7th_Street,_NW_in_Washington,_D.C.JPGView on Boundless.com

  15. The Financial System Equilibrium in the loanable funds market When the supply and demand for loanable funds are equal, savings is equal to investment and the loanable funds market is in equilibrium at the prevailing interest rate. Free to share, print, make copies and changes. Get yours at www.boundless.com Wikimedia.CC BY-SAhttp://upload.wikimedia.org/wikipedia/en/5/5d/Loanable_funds_market.JPGView on Boundless.com

  16. The Financial System Attribution • Wiktionary."pooling."CC BY-SA 3.0http://en.wiktionary.org/wiki/pooling • Wikipedia."financial intermediary."CC BY-SA 3.0http://en.wikipedia.org/wiki/financial%20intermediary • Wikipedia."Financial intermediary."CC BY-SA 3.0http://en.wikipedia.org/wiki/Financial_intermediary • Wikipedia."real interest rates."CC BY-SA 3.0http://en.wikipedia.org/wiki/real%20interest%20rates • Wikibooks."Macroeconomics/Savings and Investment."CC BY-SA 3.0http://en.wikibooks.org/wiki/Macroeconomics/Savings_and_Investment • Boundless Learning."Boundless."CC BY-SA 3.0http://www.boundless.com//economics/definition/loanable-funds • Wikipedia."Loanable funds."CC BY-SA 3.0http://en.wikipedia.org/wiki/Loanable_funds • Wikipedia."Present value."CC BY-SA 3.0http://en.wikipedia.org/wiki/Present_value • Wikipedia."time value of money."CC BY-SA 3.0http://en.wikipedia.org/wiki/time%20value%20of%20money • Wikipedia."Time value of money."CC BY-SA 3.0http://en.wikipedia.org/wiki/Time_value_of_money • Wiktionary."time horizon."CC BY-SA 3.0http://en.wiktionary.org/wiki/time_horizon • Wikipedia."risk premium."CC BY-SA 3.0http://en.wikipedia.org/wiki/risk%20premium • Wikipedia."Risk premium."CC BY-SA 3.0http://en.wikipedia.org/wiki/Risk_premium • Wikipedia."asset clas."CC BY-SA 3.0http://en.wikipedia.org/wiki/asset%20clas • Wikipedia."risk premium."CC BY-SA 3.0http://en.wikipedia.org/wiki/risk%20premium • Wiktionary."prospectus."CC BY-SA 3.0http://en.wiktionary.org/wiki/prospectus • Wikipedia."Systematic risk."CC BY-SA 3.0http://en.wikipedia.org/wiki/Systematic_risk Free to share, print, make copies and changes. Get yours at www.boundless.com

  17. The Financial System • Wikipedia."Diversification (finance)."CC BY-SA 3.0http://en.wikipedia.org/wiki/Diversification_(finance) • Wiktionary."security market line."CC BY-SA 3.0http://en.wiktionary.org/wiki/security_market_line • Wiktionary."systematic risk."CC BY-SA 3.0http://en.wiktionary.org/wiki/systematic_risk • Wikipedia."capital asset pricing model."CC BY-SA 3.0http://en.wikipedia.org/wiki/capital%20asset%20pricing%20model • Wikipedia."non-systematic risk."CC BY-SA 3.0http://en.wikipedia.org/wiki/non-systematic%20risk • Wikipedia."Capital asset pricing model."CC BY-SA 3.0http://en.wikipedia.org/wiki/Capital_asset_pricing_model • Wikipedia."Security market line."CC BY-SA 3.0http://en.wikipedia.org/wiki/Security_market_line Free to share, print, make copies and changes. Get yours at www.boundless.com

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