Chapter 2: Financial Markets and Institutions Flashcards
financial market
market in which securities are issued and traded
primary market
market for the sale of new securities by corporations
secondary market
market in which already issued securities are traded among investors
fixed-income market
market for debt securities
capital market
market for long-term financing
money market
market for short-term financing (less than one year)
financial intermediary
an organization that raises money from investors and provides financing for individuals, corporations, or other organizations
mutual fund
a managed investment fund, pooling the savings of many investors and investing in a portfolio of securities
exchange-traded fund (ETF)
an investment fund, traded on a stock exchange, that pools the savings of many investors and invests in a portfolio of securities, selected to replicate an established securities index
hedge fund
a private investment pool, open to wealthy or institutional investors, that is only lightly regulated and therefore can pursue more speculative policies than mutual funds
private equity fund
investment fund focused on investing in equity of privately owned businesses
pension fund
investment plan set up by an employer to provide for employees’ retirement
financial institution
a bank, insurance company, or similar financial intermediary
liquidity
the ability to sell or exchange an asset for cash on short notice
cost of capital
minimum acceptable rate of return on capital investment
