Term
| Who are the most important borrowers-spenders? |
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Definition
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Term
| Borrowers borrow funds directly from lenders in financial markets by selling them securities |
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Definition
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| Claims on the borrower's future income or assets |
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Definition
| Securities- these are assets for the person who buys them |
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Definition
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Term
| Financial markets are crucial for producing an efficient allocation of _________. |
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Definition
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Term
| Wealth, either financial or physical, that is employed to produce more wealth |
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Definition
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Term
| What are the two ways a firm or individual can obtain funds in a financial market? |
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Definition
1. Using a debt instrument- such as a bond or mortgage- which is a contractual agreement by the borrower to pay the holder of the instrument fixed dollar amounts
2. Issuing equities- such as common stock- which are claims to share in the net income and the assets of a business |
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Term
| These often make periodic payments (dividends) to their holders and are considered long-term securities because they have no security date |
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Definition
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Term
| The main disadvantage of owning a corporation's equities rather than its debt is that an equity holder is a __________ __________ |
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Term
| Debt market is larger than the equity market. |
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Definition
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Term
| Financial market in which NEW issues of security are sold- such as a bond or stock |
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Definition
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| Securities that have been previously issued can be resold |
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Definition
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Term
| An important financial institution that assists in the in the initial sale of securities in the primary market |
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Definition
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| It guarantees a price for a corp's securities and then sells them to the public |
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Definition
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| Linking buyers and sellers |
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Definition
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| Link buyers and sellers by buying and selling securities at states prices |
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Definition
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| A corporation acquires new funds only when its securities are first sold in the primary market |
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Definition
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Term
| Where buyers and sellers of securities meet in one central location to conduct trades ie. NYSE |
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Definition
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Term
| Dealers at different locations who have an inventory of securities stand ready to buy and sell securities "over the counter" |
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Definition
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Term
| Only where short term (less than one year) debt securities are traded |
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Definition
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| Longer-term debt and equity instruments are traded |
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Definition
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| Short term, least price fluctuations, risky investments |
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Definition
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| Most liquid of all the money market instruments because they are the most actively traded |
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Definition
| U.S. Treasury Bills- money markets |
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| Short-term debt instrument issued by large banks and well-known corp's |
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Definition
| Commercial paper-money markets |
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| Short-term loans for which Treasury bills serve as collateral |
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Definition
| Repurchase agreements- money markets |
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Term
| A closely watched barometer of the tightness of credit market conditions in the banking system |
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Definition
| Federal funds rate-money market |
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Term
| The largest debt market in the U.S. |
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Definition
| Mortgage market-- capital markets |
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Term
| Equity claims on the net income and assets of a corporation |
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Definition
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Term
| Long-term debt instruments and issued by the U.S. Treasury to finance the deficits of the federal govt. |
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Definition
| U.S. government securities |
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Term
| The traditional instruments in the international bond market |
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Definition
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Term
| A bond denominated in a currency other than that of the country in which it is traded |
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Definition
| Eurobond- currently over 80% of all new issues in the international bond market |
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Term
| The time and money spent in carrying out financial transactions |
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Definition
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Term
| The reduction of transaction costs per dollar of transactions as the size if transactions increases |
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Definition
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Term
| A problem created by asymmetric info before the transaction occurs |
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Definition
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| A problem created by asymmetric info after the transaction occurs |
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Definition
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Term
| Financial intermediaries are able to alleviate these problems of moral hazard and adverse selection |
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Definition
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Term
| Savings and loan associations, mutual savings, banks, and credit unions |
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Definition
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Term
| Financial intermediaries make profits by reducing transactions costs |
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Definition
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