CPCU 540 Ch. 7 Flashcards
A mechanism used for trading securities
Financial market
Written instruments representing either money or other property, such as stocks and bonds
Securities
A financial market in which short-term securities are traded
Money market
A financial market in which long-term securities are traded
Capital market
A mechanism in which new securities are sold, with proceeds going directly to the insurer
Primary market
The price a dealer is willing to pay for a security
Bid price
The price at which the dealer is willing to sell a security
Asked price
The difference between the bid price and the asked price of a security
Bid-asked spread
A mechanism for investors to buy and sell previously issued securities
Secondary market
The ability of the market to handle a large number of securities transactions without a significant effect on prices
Market depth
The percentage of the overall market that is participating in the market’’s up or down move
Market breadth
An entity that obtains money from one source and redirects it to another
Financial intermediary
The risk that customers or other creditors will fail to make promised payments as they come due
Credit risk
The potential for a major disruption in the function of an entire market or financial system
Systematic risk
The risk that an asset cannot be sold on short notice without incurring a loss
Liquidity risk
