8.2 Financial markets Flashcards
What is a financial market?
A marketplace where financial wealth or assets (such as equities, bonds, currencies and derivatives) are traded.
What are stocks?
The overall ownership in one or more companies. (as opposed to shares which are certificates of ownership in a particular company).
What is an investor?
A person or entity who invests of commits capital into an entity with the expectation of financial returns.
What is a lender?
A person, group or financial institution that lends money with the expectation of return with interest.
What is a borrower?
A person or entity who obtains funds for a specified period on the promise of repayment.
What is a bank?
A financial institution licenced to receive deposits and make loans.
What is a financial regulator?
An institution that supervises and controls a financial system to protect the interest of investors and to guarantee fair and efficient markets. e.g. LSE
What is an intermediary?
A service provider in the market who facilitates connections between investors and fund users.
What is a capital market?
A market where long-term finances with maturities greater than one year are traded.
What is a primary market?
A new issues market where companies can raise new funds by issuing shares of loans stock.
What is a secondary market?
A market facilitating the dealing and trading of already-issued securities.
What is a money market?
A market where instruments with high liquidity and very short maturity (less than one year) are traded.
What are treasury bills(“T-Bills”)?
Short-term debt instruments issued and backed by the government.
What is a commercial paper?
A short-term unsecured debt instrument issued and backed by an issuing company or bank.
Market trading is usually done “over the counter” (OTC). What does this mean?
A decentralized market where assets are traded through private securities dealers (rather than through a formal exchange).
