Term
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Definition
| venue where goods and services are exchanged |
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Term
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Definition
| place where individuals and organizations wanting to borrow funds are brought together with those having a surplus of funds |
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Term
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Definition
| markets in which debt securities with maturities of less than one year are traded |
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| Example of Long-Term Securities |
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Term
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Definition
| markets in which corporations raise capital by issuing new securities |
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Definition
| markets in which securities and other financial assets are traded among investors after they have been issued by corporations |
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Term
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Definition
| markets in which assets are bought or sold for "on the spot" delivery |
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Term
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Definition
| markets in which participants agree today to buy or sell an asset at some future date |
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Term
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Definition
| standardized contracts are traded on organized exchanges |
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Term
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Definition
| transactions are worked out directly between two parties |
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Term
| Types of Financial institutions |
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Definition
| Commercial banks, Investment banks, S&L and Mutual savings banks, Credit Unions, Pension funds, Life insurance companies, Mutual funds, and Hedge funds |
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Term
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Definition
| Secondary market, NYSE and NASDAQ |
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Term
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Definition
| members="specialists"-keep an inventory of particular stocks
buy(sell) order
bid price and ask prices-set to maintain the inventory
bid |
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Term
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Definition
"make the market" dealers, thousands of brokers, computers, bid-ask spread=dealers markup
brokers bring in the investors |
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Term
| IPO(Initial public offering) |
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Definition
a company issues stock in the public market for the first time~"going public", owners raise capital and once issued the stock trades in the secondary market
-subject to additional regulations and reporting requirements |
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Term
| Efficient Market Hypothesis |
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Definition
| normally in equilibrium and are "fairly priced". Investors cannot "beat the market" except through good luck or better information. |
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Term
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Definition
can't profit by looking at past trends. A recent decline is no reason to think stocks will go up (or down) in the future
empirical studies suggest the stock market is highly efficient in the weak form , reasonably efficient in the semistrong and not efficient in the strong(insiders have made abnormal and sometimes illegal profits) |
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Term
| Semistrong-form efficiency |
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Definition
| all publicly available information is reflected in stock prices. superior analysts can still profit by finding and using new information |
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Term
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Definition
| all information-even inside info and embedded in stock prices. |
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Term
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Definition
| relationship between interest rates(or yields) and maturities |
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Term
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Definition
| graph of the term structure-reveals expected future interest rates |
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Term
| Pure Expectations Hypothesis(PEH) |
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Definition
| shape of the yield curve-expectations future interest rates. |
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Term
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Definition
| geometric average of current and future short-term rates |
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