Chapter 3 Flashcards
Debt obligations of large corporations and governments with an original maturity of one year or less
Money Market Instruments
Longer-term debt obligations, often of corporations and governments, that promise to make fixed payments according to a preset schedule
Fixed-Income Securities
Annual coupon divided by the current bond price
Current Yield
Security originally sold by a business or government to raise money
Primary Asset
A financial asset that is derived from an existing traded asset rather than issued by a business or government to raise capital
Derivative Asset
An agreement made today regarding the terms of a trade that will take place later
Futures Contract
An agreement that gives the owner the right, but not the obligation, to buy or sell a specific asset at a specified price for a set period of time
Option Contract
An option that gives the owner the right, but not the obligation, to buy an asset
Call Option
An option that gives the owner the right, but not the obligation, to sell an asset
Put Option
The price you pay to buy an option
Option Premium
The price specified in an option contract at which the underlying asset can be bought or sold
Strike Price
