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Definition
| The problem created by asymmetric information before a transaction occurs: The people who are the most undesirable from the other party's point of view are the ones who are most likely to want to engage in the financial transaction. |
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Definition
| The process of turning risky assets into safer assets for investors by creating and selling assets with risk characteristics that people are comfortable with and then using the funds acquired be selling these assets to purchase other assets that may have far more risk. |
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Definition
| The unequal knowledge that each party to a transaction has about the other party. |
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Definition
| Agents for investors; they match buyers with sellers |
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Term
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Definition
| Wealth, either financial or physical, that is employed to produce more wealth. |
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Term
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Definition
| A financial market in which longer-term debt (generally with original maturity of greater than one year) and equity instruments are traded. |
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Definition
| Paper money (such as dollar bills) and coins |
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Term
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Definition
| People who link buyers and sellers by buying and selling securities at stated prices |
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Definition
| Investing in a collection (portfolio) of assets whose returns do not always move together, with the result that overall risk is lower than for individual assets. |
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Term
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Definition
| Periodic payments made by equities to share-holders. |
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Term
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Definition
| The reduction in transaction costs per dollar of transaction as the size (scale) of transactions increases. |
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Term
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Definition
| Claims to share in the net income and assets per dollar of equity capital. |
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Term
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Definition
| Bonds denominated in a currency other than that of the country in which they are sold. |
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Term
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Definition
| A variant of the Eurobonds; foreign currencies deposited in banks outside the home country. |
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Term
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Definition
| U.S. dollars that are deposited in foreign banks outside the United States or in foreign branches of U.S. banks. |
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Term
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Definition
| Secondary makers in which buyers and sellers of securities (or their agents or brokers) meet in one central location to conduct trades. |
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Term
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Definition
| The interest rate on overnight loans of deposits at the Federal Reserve. |
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Term
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Definition
| Institutions (such as banks, insurance companies, mutual funds, pension funds, and finance companies) that borrow funds from people who have saved and then make loans to other. |
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Term
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Definition
| The widespread collapse of financial markets and intermediaries in an economy. |
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Term
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Definition
| Bonds sold in a foreign country and denominated in that country's currency. |
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Term
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Definition
| With reference to a debt instrument, having maturity of between one and ten years. |
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Term
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Definition
| Firms that assist in the initial sale of securities in the primary market. |
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Term
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Definition
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Term
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Definition
| Easily converted into cash |
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Term
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Definition
| Services financial intermediaries provide to their customers to make it easier for them to conduct their transactions. |
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Term
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Definition
| With reference to a debt instrument, having a maturity of ten years or more. |
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Term
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Definition
| Time to the expiration date (maturity date) of a debt instrument. |
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Term
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Definition
| A financial market in which only short-term debt instruments (generally those with original maturity of less than one year) are traded. |
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Term
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Definition
| The risk that one party to a transaction will engage in behavior that is undesirable from the other party's point of view. |
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Term
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Definition
| A secondary market in which dealers at different locations who have an inventory of securities stand ready to buy and sell securities "over the counter" to anyone who comes to them and is willing to accept their prices. |
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Term
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Definition
| A collection or group of assets. |
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Term
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Definition
| A financial market in which new issues of a security are sold to initial buyers |
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Term
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Definition
| The degree of uncertainty associated with the return on an asset |
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Term
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Definition
| The process of creating and selling assets with risk characteristics that people are comfortable with and then using the funds acquired by selling these assets to purchase other assets that may have far more risk. |
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Term
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Definition
| A financial market in which securities that have previously been issued can be resold |
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Term
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Definition
| With reference to a debt instrument, having a maturity of one year or less |
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Term
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Definition
| Savings and loan associations, mutual savings banks, and credit unions. |
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Term
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Definition
| The time and money spent trying to exchange financial assets, goods, or services. |
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Term
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Definition
| Purchase securities from a corporation at a predetermined price and then resell them in the market |
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Term
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Definition
| Money made up of precious metals or another valuable commodity |
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Term
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Definition
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Term
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Definition
| An extreme inflation in which the inflation rate exceeds 50% per month. |
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Term
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Definition
| The relative ease and speed with which an asset can be converted into cash |
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Term
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Definition
| A measure of money that includes currency, traveler's checks, and checkable deposits |
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Term
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Definition
| In addition to M1: money market deposit accounts, money market mutual fund shares, savings deposits, overnight repos, and overnight euro dollars |
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Term
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Definition
| Anything that is used to pay for goods and services |
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Term
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Definition
| The measures of the money supply used by the FED (M1 and M2) |
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Term
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Definition
| The method of conducting transactions in the economy |
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Term
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Definition
| A repository of purchasing power over time |
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Term
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Definition
| Anything used to measure value in an economy |
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Term
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Definition
| All resources owned by an individual, including all assets |
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Term
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Definition
| Cash payments to the holder of a security. |
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Term
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Definition
| A perpetual bond with no maturity date and no repayment of principal that periodically makes fixed coupon payments |
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Term
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Definition
| A credit market instrument that pays the owner a fixed interest payment every year until the maturity date, when a specified final amount is repaid. |
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Term
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Definition
| An approximation of the yield to maturity that equals the yearly coupon payment divided by the price of a coupon bond. |
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Term
| Discount Bond (Zero-Coupon) |
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Definition
| A credit market instrument that is bought at a price below its face value and whose face value is repaid at the maturity date; it does not make any interest payments. |
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Term
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Definition
| A specified final amount paid to the owner of a coupon bond at the maturity date. |
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Term
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Definition
| A credit market instrument that provides a borrower with an amount of money that is repaid by making a fixed payment periodically for a set number of years. |
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Term
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Definition
| A bond whose interest and principal payments are adjusted for changes in the price level, and whose interest rate thus provides a direct measure of a real interest rate. |
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Term
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Definition
| The possible reduction in returns associated with changes in interest rates. |
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Term
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Definition
| An interest rate that does no take inflation into account |
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Term
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Definition
| Today's value of a payment to be received in the future when the interest rate is i. |
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Term
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Definition
| The change in a security's price relative to the initial purchase price. |
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Term
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Definition
| The interest rate adjusted for expected changes in the price level (inflation) so that it more accurately reflects the true cost of borrowing. |
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Term
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Definition
| The payments to the owner of a security plus the change in the security's value, expressed as a fraction of its purchase price. |
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Term
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Definition
| The interest rate that equates the present value of payments received from a credit market instrument with its value today. |
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