Business finance Flashcards
What are the risk and returns prospects of debt holders and equity holders?
Debt: lower risk lower returns
Equity: higher risk higher returns
What are the four motivations for holding cash?
Transaction
Precautionary
Investment
Finance
what approach to finance is when a business uses more short term finance?
aggressive position
what approach to finance is it when a business uses long term finance?
defensive position
what approach to finance is when a business strikes a balance between risk and reward in its financing approach?
average position
What is a primary bank?
Commercial/retail banks
What is a secondary bank?
Merchant/investment
Who sets the base rate?
Monetary Policy Committee
Who is responsible for promoting effective competition and making sure that relevant markets function well?
Financial Conduct Authority (FCA)
What is it called when a bank has right to assets of customer if customer defaults on loan?
mortgagor/mortgagee relationship
what is it called when the bank pays a third party sums promised on a customer cheque?
principal/agent relationship
what is it called when a bank safeguards property for a customer?
bailor/bailee relationship
