Financial assets vs. Financial liabilities
Financial assets
.Stocks and bonds that provide expected future benefits
.Benefits the owner only if the issue of the asset meet certain obligations
Financial liabilities
.It is encouraged by the issuer of a financial asset to stand behind the issued asset
Interest rate-is the price paid for the use of a financial asset
Stocks- are Financial assets that represent ownership in a corporation
Bonds-are the promise to pay a certain amount of money plus interest in the future
What banks do
A bank is a financial intermediary
.Uses liquid assets to finance the Investments of Borrowers
.process is known as Financial reserve banking
.A system in which depository institutions hold liquid assets less than the amount of deposits
.Can take form of currency in Bank vaults Bank Reserves deposits held out the Federal Reserve
What banks do-basic accounting review
T account -Statements of assets and liabilities
Assets-item see how much a bank holds legal claim the uses of funds in Financial intermediaries
You forgot to add in liabilities which is the legal claims against a bank, which is the source of funds for financial intermediaries. But otherwise, good job man
ReplyDeleteAll your definitions are clear and concise, but i would have appreciated more detail on the differences between Aretha's and liabilities. Try using graphs or a least using your own word. A visual for the basic accounting review would have been helpful as well.
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