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Managerial Finance > Ch.2 > Flashcards

Ch.2 Flashcards

1
Q

Spot Markets

A
  • Markets where financial instruments or commodities are traded for immediate delivery
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2
Q

Futures Markets

A
  • Markets where participants agree to buy or sell an asset at future date for a price specified today
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3
Q

Money Markets

A
  • Markets for short-term debt securities
  • Typically with maturities of less then one year
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4
Q

Capital Markets

A
  • Markets where long-term debt or equity-backed securities are bought and sold
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5
Q

Primary Markets

A
  • Markets where new securities are issued and sold for the first time
  • Investment Banks are trading
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6
Q

Secondary Markets

A
  • Markets where previously issued securities are traded between investors
  • Trading on Charles Schwab
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7
Q

Private Markets

A

Markets where transactions are negotiated directly between parties without public exchange

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8
Q

Public Markets

A
  • Markets where securities are traded on organized exchanges and are open to the public
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9
Q

Derivatives

A
  • Financial instruments whose value is derived from the value of an underlying asset
  • Options or futures
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10
Q

Investment Banks (IBs)

A
  • Financial institutions that assist companies in raising capital, underwriting new securities, and providing advisory services for mergers and acquisitions
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11
Q

Commercial Banks

A

Financial institutions that provide a broad range of services
- Accepting deposits
- Providing loans
- Offering investment products

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12
Q

Financial Services Corporations

A

Large firms that offer a range of financial services
- Investment
- Banking
- Insurance Services

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13
Q

Mutual Funds

A

Investment funds that pool money from many investors to purchase a diversified portfolio of securities

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14
Q

Money Market Funds

A

Mutual funds that invest in short-term high-quality, and low-risk debt instruments
- Treasury Bills
- Commercial Paper

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15
Q

Exchange-Traded Funds (ETFs)

A

Investment funds that trade on stock exchanges similar to stocks and hold a portfolio of assets such as
- Bonds
- Stocks
- Commodities

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16
Q

Hedge Funds

A

Private investment funds that engage in more aggressive strategies to maximize returns for their investors

17
Q

Private Equity Companies

A

Investment firms that acquire private companies or invest in private companies through
- Equity stakes
- Goal of improving their financial performance

18
Q

Physical Location Exchanges

A

Exchanges have a physical location where trading can take place (NYSE)

19
Q

Over-the-Counter (OTC) market

A

Securities are traded directly between parties rather then on a formal exchange

20
Q

Dealer Market

A

Transactions are made through a network of dealers who buy and sell for their own accounts

21
Q

Closely Held Corporation

A

Corporation who’s stock is held by a small number of shareholders often family members and it is not publicly traded

22
Q

Publicly Owned Corporation

A

Traded publicly and can be owned by a wide range of investors

23
Q

Going Public

A

Process which a private company becomes a publicly traded company by offering its shares through an initial public offering (IPO)

24
Q

Initial Public Offering (IPO) Market

A

Market for the first sale of stock by a private company to the public

25
Q

Efficient markets hypothesis (EMH)

A

A theory that states that asset prices fully reflect all available information, making it
impossible to consistently achieve higher returns without taking additional risk

26
Q

Arbitrage

A

The practice of taking advantage of a price difference between two or more markets to
generate a profit.

27
Q

Behavioral finance

A

A field of study that combines behavioral and psychological theories with economics to
explain why people make irrational financial decisions.

Managerial Finance (3 decks)

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