Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

ECON 215 STOCKS & MARKETS > Chapters 1 and 2 > Flashcards

Chapters 1 and 2 Flashcards

1
Q

bonds

A

debt securities that promise to make payments periodically for a specific amount of time

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Banks

A

financial institutions that accepts deposits and makes loans.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

central bank

A

The most important part of the financial system. In the US it is the Fed. The central bank is the government agency that controls monetary policy / money supply.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Federal Bank

A

Central Bank of the US that controls monetary policy and monetary supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

e-finance

A

Delivering financial services electronically

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

financial crisis

A

major disruptions in financial markets that are characterized by large declines in assets prices and failures of many firms ( both financial and financial)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

financial innovation

A

The development of new financial products and services . Could lead to a financial crisis but also lead to new technology and accessibility.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Assets

A

financial claim or piece of property that is subject to ownership

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

common stock

A

a share of ownership in a cooperation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

financial intermediaries

A

institutions that borrow funds from people’s savings and transfer them to make loans to others.
Examples would include banks, insurance companies, mutual funds.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

financial markets

A

markets in which funds are transferred from people who have excess available funds to people who have a shortage

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

foreign exchange market

A

the instrumental in moving funds between countries. A conversion in currencies often take place

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

foreign exchange rate

A

the rate which the price of one countries currency in terms of the other

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

interest rate

A

cost of borrowing or the price paid for rental funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

monetary policy

A

management of interest rates and quantity of money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

money (money supply)

A

anything that is accepted in payment for goods and services or accepted for repayment of debt.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

securities

A

claim on the issuer’s future income or assets

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

adverse selection

A

problem created by asymmetric information before a transaction occurs . For example, in the financial market, people with bad credit are the ones that actively seek out a loan, which results in them to be the group most likely to be selected.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

asset transformation

A

the process of risk sharing where risky asset is transformed into safer assets for investors

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

asymmetric information

A

When one party does not know enough about the other party to make accurate decisions

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

brokers

A

agents of investors who match buyers and sellers of securities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

capital

A

Wealth, either financial or physical, that is employed to produce more wealth

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

capital market

A

market which longer-term debt and equity instruments are traded

24
Q

conflict of interests

A

a type of moral hazard that arises when a person or institution has multiple objects, which results in conflicting of objectives.

25
Q

dealers

A

link buyers and sellers by buying and selling securities at stated prices

26
Q

diversification

A

investing in a collection of assets whose return does not always go in the same direction ( don’t put all eggs in one basket )

27
Q

dividends

A

Periodic payments made by equities to shareholders.

28
Q

Eurobond

A

a bond denominated in a currency other than that of the currency in which it is sold. An example would be a bond denominated in USD but sold in China.

29
Q

Eurocurrencies

A

foreign currencies deposited in banks outside the home country

30
Q

Eurodollars

A

USD deposited in foreign banks outside of the US or in foreign branches in of the US bank. ( They are an important source of fund for American banks )

31
Q

exchanges

A

buyers and sellers of securities meet in one central location to conduct trades

32
Q

financial intermediation

A

The process of indirect finance whereby financial intermediaries link lender-savers and borrower-spenders

33
Q

financial panic

A

widespread collapse of financial intermediaries often caused from asymmetric information.

34
Q

foreign bonds

A

Foreigns bonds are bonds that are sold in a foreign country but denominated in that country’s currency.

35
Q

intermediate-term

A

debt instruments with maturity between 1 and 10 years

36
Q

investment bank

A

financial institution that assists initial sale of securities in the primary market through underwriting securities.

37
Q

liabilities

A

debt

38
Q

liquid

A

easily transferred into cash

39
Q

liquidity services

A

services that make it easier for customers to conduct transactions. An example of this would be banks providing checking accounts.

40
Q

long-term

A

10 years or longer

41
Q

maturity

A

number of years (term) until that instrument’s expiration date

42
Q

money market

A

financial market in which only short-term debt instruments are traded

43
Q

moral hazard

A

problem created by asymmetric information after transactions occur ( ex: when one does not be careful with fire after getting a fire/ burning insurance)

44
Q

over-the-counter market

A

dealers at different locations who have inventory of securities stand ready to buy and sell securities to anyone who comes to them and are willing to accept their prices. These are usually more competitive as they are often done through the computer and know the prices set by one another.

45
Q

portfolio

A

a collection of assets

46
Q

primary market

A

financial markets in which new issues of a security are sold to initial buyers by the corporation or government agency borrowing funds

47
Q

risk

A

uncertainty about the returns investors will earn on assets

48
Q

risk sharing

A

when financial intermediates create and sell assets with risk characteristics that people are comfortable with, and then use the funds they got to purchase other assets that have lower risk

49
Q

secondary market

A

securities that have been previously issued can be resold

50
Q

short-term

A

less than a year

51
Q

thrift institutions

A

financial institutions that often accept deposits and transform them into loans (often times mortgages). These include credit unions, mutual savings banks, and saving and loan associations

52
Q

transaction costs

A

time and money spent in carrying out financial transactions

53
Q

underwriting

A

guaranteeing a price for a corporation’s securities and then sells it to the public

54
Q

economies of scale

A

reduction in transaction costs per dollar of transaction as the size or scale of transaction increases. An example of this would be when a firm hires a lawyer to create a very good airtight contract for loans. This contract could be used over and over again for each loan transaction, thereby lowering the legal cost per transaction.

55
Q

economies of scope

A

the lowering of cost of information production for each service by applying one information resource to many different services

56
Q

equities

A

claims to share in the net income and assets of a business

ECON 215 STOCKS & MARKETS (2 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions