The Service of Providing Liquidity
作者：格言网 发布时间：2016-08-05 20:59:34
The system of financial markets provides lipuidity - the ability to raise cash puickly with little risk of loss to those whc save and acquire financial claims. The investor can place funds on stocks, bonds, and other financial assets which earn income and , through the financial system, quickly convert those assets into money. In modern societies money consists mainly of deposits held at commercial banks, savings and loan associations, savings banks, and credit unions. Money has the advantage of perfect liquidity, it can be spent as it is without nesessity of converting it into some other form. However, money generally earns the lowest rate of return of all assets traded in the financial sysytem, and its purchasing power is seriously eroded by inflation. That is why savers generally minimize their holdings of money and hold stocks, bonds, and other financial assets instead until spendable funds are really needed.
