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CHAPTER OBJECTIVES

In this chapter, you will learn about:

• How Businesses Raise Financial Capital

• How Households Supply Financial Capital

• How to Accumulate Personal Wealth

Introduction to Financial Markets

BRING IT HOME

The Housing Bubble and the 2007 Financial Crisis
In 2006, housing equity in the United States peaked at $13 trillion. That means that the market prices of homes,

less what was still owed on the loans they used to buy these houses, equaled $13 trillion. This was a very good

number, since the equity represented the value of the financial asset most U.S. citizens owned.

However, by 2008 this number declined to $8.8 trillion, and it plummeted further still in 2009. Combined with the

decline in value of other financial assets held by U.S. citizens, by 2010, U.S. homeowners’ wealth had shrunk $14

trillion! This is a staggering result, and it affected millions of lives: people had to alter their retirement, housing, and
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