Occurs when suppliers of loanable funds (savers) trade with demanders of loanable funds (borrowers). Trading in the market for loanable funds determines the equilibrium interest rate.

A certificate of ownership in a corporation.

A sophisticated IOU that documents who owes how much and when payment must be made.

The value of the asset minus the debt, E = V – D.

The desire to have goods and services sooner rather than later (all else being equal).

Such as banks, bond markets, and stock markets reduce the costs of moving savings from savers to borrowers and investors.

Income that is not spent on consumption goods.

The buying and selling of equally risky assets, ensures that equally risky assets earn equal returns.

A firm that has liabilities that exceed its assets.

The first time a corporation sells stock to the public in order to raise capital.

The ratio of debt to equity, D/E.

The purchase of new capital goods.