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| An intermediary that channels the savings of individuals, businesses, and governments into loans or investments |
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| Individuals as a group are net suppliers. They save more money than they borrow. |
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| Firms and the government are net demanders of funds. |
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| Institutions that provide savers with a secure place to invest their funds and that offer loans to individual and business borrowers. |
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| Institutions that assist companies in raising capital, advise firms on major transactions such as mergers or financial restructurings and engage in trading and market making activities |
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| An act of Congress in 1933 that created the federal deposit insurance program and separated the activities of commercial and investment banks meaning that an institution engaged in taking in deposits could not also engage in the somewhat riskier activities of securities underwriting and trading. |
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Definition
| A group of institutions that engage in lending activities, much like traditional banks, but do not accept deposits and therefore are not subject to the same regulations as traditional banks. |
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| Forums in which suppliers of funds and demanders of funds can transact business directly. |
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| The sale of a new security directly to an investor or group of investors. |
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| The sale of either bonds or stocks to the general public |
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| Financial market in which securities are initially issued; the only market in which the issuer is directly involved in the transaction. |
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| Financial market in which preowned securities are traded. |
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Definition
| A financial relationship created betweeen suppliers and demanders of short-term funds. |
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Term
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Definition
| Short-term debt instruments, such as US treasury bills commercial paper, and negotiable certificates of deposit issued by government, vusiness, and financial institutions, respectively. |
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| International equivalent of the domestic money market |
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Definition
| A market that enables suppliers and demanders of long-term funds to make transactions. |
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| Long-term debt instrument used by business and government to raise large sums of money, generally from a diverse group of lenders. The key capital market securities are bonds and both common stock and preferred stock. |
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Definition
| A special form of ownership having a fixed periodic dividend that mush be paid prior to payment of any dividends to common stockholders. |
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| The securities exchanges on which the two sides of a transaction, the buyer and seller, are brought together to trade securities. NYSE |
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Definition
| Organizations that provide the marketplace in thich firms can raise funds through the sale of new securities and pruchasers can resell securities |
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| Teh market in which the buyer and seller are not brought together directly but instead have their orders executed by securities dealers that "make markets" in the given security. Nasdaq |
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Definition
| Securities dealers who "make markets" by offering to buy or sell certain securities at stated prices |
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Definition
| An all-electronic trading platform used to execute securities trades. |
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| OTC (over the counter) market |
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Definition
| Market where smaller, unlisted securities are traded. |
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Definition
| A bond that is issued by a foreign corporation or government and is denominated int eh investor's home currency and sold in the investor's home market. |
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| international equity market |
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Definition
| A market that allows corporations to sell blocks of shares to investors in a number of different countries simutaneously |
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Definition
| A market that allocates funds to their most productive uses as a result of competition among wealth-maximizing investors and that determines and publicizes prices that are believed to be close to their true value. |
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Definition
| The process of pooling mortgages or other types of loans and then selling claims or securities against that pool in the secondary market. |
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Term
| mortgage-backed securities |
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Definition
| Securities that represent claims on the cash flows generated by a pool of mortgages. |
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Definition
| Loans made to borrowers with lower incomes and poorer credit histories. Often with adjustable interest rates making these borrowers vulnerable if interest rates rise. |
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Term
| federal deposit insurance corporation |
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Definition
| An agency created by the Glass-Steagall Act that provides insurance for deposits at banks and monitors banks to ensure their safety and soundness. |
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Term
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Definition
| An act that allows business combinations (that is, mergers) between commercial banks, investment banks, and insurance companies, and thus permits these institutions to compete in markets thaat prior regulations prohibited them from entering. (1999) |
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Term
| Dodd-Frank Wall street Reform and Consumer Protection Act |
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Definition
| July 2010 Creation of several new agencies to oversee financial instutions. |
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Term
| Securities and exchange commission |
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Definition
| The primary government agency responsibl for enforcing federal securities laws. |
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Definition
| Income earned through the sale of a firm's goods or services. |
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Definition
| The rate at which additional income is taxed. |
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Definition
| The average tax rate paid on the firm's ordinary income can be calculated by dividing its taxes by its taxable income. The tax rates change with income levels. |
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Definition
| Situation that occurs when after-tax corporate earnings are distributed as cash dividends to stockholders, who then must pay personal taxes on he dividend amount |
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Definition
| The amount by which the sale price of an asset exceeds the asset's purchase price. |
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