CH01 Flashcards

(22 cards)

1
Q

Financial markets

A

Transfer $$ from people with excess to people with a shortage

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2
Q

Security / financial instrument

A

Claim on issuers FV income/assets

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3
Q

INT %

A

$$ paid for rental of funds

Ex: I/Y of 4% on a 1y loan of $100 (FV = $104)

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4
Q

Types of Financial Markets

Hint : 2

A
  1. Bond Market
  2. Stock Market
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5
Q

Bond Markets

A

Debt security = periodic PMTs @ specific times
I/Y (%) = IMPORTANT

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6
Q

Stock Market

A

Stock= share of ownership of org.
Asset = ANY financial claim subject to ownership
“Value” = reflects both, comp.’s assets & expectations for the future

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7
Q

Financial Intermediaries

A

(Organization enables Financial Markets to work)

“Transfers” funds (savers—> those in need of (I) funds)

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8
Q

Banks

A

“Borrow” funds by accepting deposits
(Chartered banks, trust & mortgage, Cr unions, causes populaires)

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9
Q

Other Fin. Institutions

A

( insurance companies, fin. Companies, pension funds, mutual funds, investment banks)

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10
Q

Financial Innovation

Innovation & E- Finance

A

Innovation : development of new g&s in FM

(Increase efficiently)

E-Finance : Online FMs and services

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11
Q

Financial Crisis

A

Major disruptions in FM
(Ex: sharp fall in asset value, failure of firms)

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12
Q

Money

A

Anything accepted as PMT for g&s + debt

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13
Q

Monetary Policy

A

Used to influence the eco. = central role of Bank of Canada

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14
Q

Money / Monetary Policy affects:

A
  • bus. cycle
  • INF
  • I/Y
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15
Q

Business Cycle

A

Up or down mouvement of Aggregate O in the eco.

UNEMP % = heavily affected

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16
Q

Money & INF

A

Aggregate PL = ave. $$ of g&s in eco.

INF = ”overall” PL increase
(Affects EVERYONE)

17
Q

Fiscal & Monetary Policy

A

Fiscal Policy = gov. Expenditures & tax revenue
- federal & provincial gov.
Monetary Policy = managing MS & I/Ys
- Bank of Canada

18
Q

Budget Deficit

A

Spending > Revenue

19
Q

Budget Surplus

A

Spending < Revenue

20
Q

Why study International Finance?

A
  • globalisation of (FM) = rapid pace
  • Borrowing & Lending = can cross boarders
21
Q

Foreign Exchange Market

A

Where funds are converted from one currency to an other

22
Q

Foreign Exchange Rate (%)

A

The $ of one currency relative to another

* EXCHANGE RATES DETERMINE THE MARKET*