Chapter 17 Flashcards

1
Q

Define Money

A

Anything that is an acceptable form of payment.

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2
Q

Define Currency

A

Bank notes and coins used as a medium of exchange

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3
Q

Define Demand Deposits

A

Money kept in checking accounts that can be withdrawn by depositors on demand.

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4
Q

Define Time Deposits

A

Money invested for a specific time

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5
Q

Define Term Deposits

A

Deposits at a bank or other financial institution that pay interest but cannot be withdrawn on demand.

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6
Q

Define Open Market Operations

A

The purchase or sale of Canadian government securities by the Bank of Canada to stimulate or slow down the economy.

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7
Q

Define Bank Rate

A

The interest rate that the Bank of Canada charges on one-day loans to financial institutions.

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8
Q

Define Target for the overnight rate

A

The signal to the major participants in the money market as to what the Bank of Canada is aiming for when participants borrow and lend one-day funds to each other.

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9
Q

Denise Four Pillars of the Canadian Financial System

A

The country’s banks, trust companies, insurance companies, and investment dealers.

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10
Q

Define Financial Intermediation

A

The process in which financial institutions act as intermediaries between the suppliers and demanders of funds.

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11
Q

Define Chartered Banks

A

Profit oriented financial institutions that accept deposits make business and consumer loans invest in government and corporate securities and provide other financial services.

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12
Q

Define Trust Company

A

A financial institution that conducts the same activities as a bank but can also administer estates, trusts, pension plans and agency contracts.

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13
Q

Define Credit unions and causes populaires

A

Not for profit, member owned financial cooperatives

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14
Q

Define Pensions Funds

A

Large pools of money set aside y corporations, unions, and governments for later use in paying retirement benefits to their employees or members.

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15
Q

Define Canada Deposit Insurance Corporation (CDIC)

A

A federal Crown corporation created in 1967 to provide deposit insurance and contribute to the stability of Canada’s financial system.

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16
Q

Define Securities

A

Investment certificates issued by corporations or governments that represent either equity or debt.

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17
Q

Define Common Shares

A

The most widely form of ownership with the right of owner (shareholder) to vote on important corporate decisions.

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18
Q

Define Dividends

A

Profits of the company that are distributed to the shareholders

19
Q

Define Preferred Shares

A

Shares, that unlike common shares, have a specified fixed dividend but typically not a voice in management.

20
Q

Define Bonds

A

Securities that represent a long-term debt obligations (liabilities) issued by corporations or governments.

21
Q

Define Interest

A

A fixed amount of money paid by the issuer of a bond to the bondholder on a regular schedule, typically every six months; stated as the coupon rate.

22
Q

Define Principal

A

The amount borrowed by the issuer of a bond; also called par value.

23
Q

Define High-Yield (junk) bonds

A

Hight risk; High return bonds

24
Q

Define secured bonds

A

Corporate bonds for which specific assets have been pledged as collateral.

25
Q

Define mortgage bonds

A

Corporate bonds that are secured by property, such as land, equipment or buildings.

26
Q

Define Debentures

A

Unsecured bonds that are backed only by the reputation of the issuer and its promise to pay the principal and interest when due.

27
Q

Define Convertible Bonds

A

Corporate bonds for which specific assets have been pledged as collateral.

28
Q

Define Bond Ratings

A

Letter grades assigned to bond issues to indicate their quality or level of risk; assigned by rating agencies such as Moody’s and Standard and Poor’s (S&P)

29
Q

Define Mutual Fund

A

A financial services company that pools its investors funds to buy a selection of securities that meet its stated investment goals.

30
Q

Define Exchange traded fund (ETF)

A

A basket of marketable securities in a category, such as an industry sector, an investment objective, or a geographical area, or that track an index; similar to mutual funds but trade like shares.

31
Q

Define Futures contracts

A

Legally binding obligations to buy or sell specified quantities of commodities or financial instruments at an agreed on price at a future date

32
Q

Define Options

A

Contracts that entitle holders to buy or sell specified quantities of common shares or other financial instruments at a set price during a specified time.

33
Q

Define Institutional Investors

A

Investment professionals who are paid to manage other people’s money.

34
Q

Define Investment Bankers

A

Companies that act as intermediaries buying securities from corporations and governments and reselling them to the public.

35
Q

Define Underwriting

A

The process of buying securities from corporations and governments and reselling them to the public to make a profit. Main activity of investment bankers.

36
Q

Define Stockbroker

A

A person who is licensed to buy and sell securities on behalf of clients.

37
Q

Define Primary Market

A

The securities market where new securities are sold to the public, usually with help of investment bankers.

38
Q

Define secondary market

A

The securities market where old (already issued) securities are bought and sold or traded, among investors.

39
Q

Define Broker markets or organized stock exchanges

A

Organizations on whose premises securities are resold by using an auction style trading system.

40
Q

Define Dealer Markets

A

Securities markets where buy and sell orders are executed through dealers or market makers linked by telecommunications networks.

41
Q

National Association of Securities Dealers Automated Quotation (NASDAQ) System

A

The first electronic based stock market and the fastest growing part of the stock market.

42
Q

Over the counter (OTC) market

A

A sophisticated telecommunications network that links dealers and enables them to trade securities.

43
Q

Bull markets

A

Markets which securities prices are rising

44
Q

Bear Markets

A

Markets which securities prices are falling.