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Accounting > FIN 430 > Flashcards

FIN 430 Flashcards

1
Q

Fiscal policy

A

executive branch legislative branch house and senate and judicial branch supreme court deals with gov’t spending and taxation

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2
Q

Monetary policy

A

federal reserve system bankers meet up talks about money supply ben bernanke and Janet Yellen

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3
Q

Financial Markets

A

Markets where funds are transferred from people and firms who have excess to people and firms who need funds

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4
Q

who do companies pay first

A

Bonds Preferred stock Common stock earns residual earning

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5
Q

Financial intermediaries

A

Institutions that borrow from people who have saved and make loans to others EG banks insurance mutual funds

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6
Q

data shows a connection between two pieces of info

A

monney supply and price level and the growth in money supply and inflation

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7
Q

GDP

A

Aggregate Output,Income,and expenditures

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8
Q

Two ways to measure aggregate price level and what is it

A

it is the average price in economy use the GDP deflator and the CPI

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9
Q

Nominal

A

Price level *Real

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10
Q

Real

A

Nominal/Price level

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11
Q

Labor force

A

number of employed + number of unemployed

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12
Q

Unemployment rate

A

Unemployed/labor force
or
unemployed/unemployed+employed

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13
Q

what is a problem with the unemployment rate

A

the discourage worker effect when labor give up on working and leave work force

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14
Q

growth rate

A

look at slide 50 in ch 1

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15
Q

stock(tricky)

A

is a quantity measured at a point in time

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16
Q

flow(tricky)

A

is a quantity measured per unit of time

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17
Q

financial crisis

A

are major disruptions in financial markets characterized by sharp declines in assets price failures of many finacial and non financial firms

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18
Q

Financial markets: direct finance

A

Borrowers borrow funds directly from lenders in financial markets by selling them securities

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19
Q

Slide 2-6

A

Important slide to have on paper hasto do with flow of funds

20
Q

Money Markets

A

Short term debt instruments COmmercial paper US treasury bill federal funds and security repurchase negotiable bank CDs

21
Q

Capital Market

A

Long term debt instruments Corporate stocks US gov securities consumer loans bank commercial loans

22
Q

Financial Intermediaries

A

lower transaction cost and reduce exposure of investors to risk EG RIsk sharing diversification They allow small burrowers like households to benefit from financial markets

23
Q

Assymmetric info

A

one party has more info than another

24
Q

Adverse Selection

A

Try to avoid selecting risky burrowers which is why banks gather much info on the burrower

25
Q

Moral Hazard

A

ensure burrowers will not engage in risky activities EG gambling by making them sign contracts

26
Q

Slide 2-19

A

great list of financial intermediaries

27
Q

Greek crisis

A

Inflation was extremely high many banks defaulted and outside lenders could not get their money back solved problem by extending payment period of loan

28
Q

Financial markets vs financial intermediaries

A

Markets are far riskier but offer better returns for entreprneurs

29
Q

Why didnt treasury bail out some and not others

A

Didnt want to bring a self forefilling prophecy if investors think you will fail you will fail

30
Q

Sarbannes oxley

A

5 things better internal monitoring of management board better external monitoring by auditors more disclosure of internal controls restriction of insiders EG loans to executives and seperation of stock analysts from other activities at investment banks

31
Q

Was SOX a good regulation?

A

made it more costly for companies to partake in stock market and required extreme transparency and so went to germany and hong kong

32
Q

four type of credit market intruments

A

simple loan fixed payment loan discount bond premium bond

33
Q

yield to maturity

A

the interest rate that equates the present value of cash flow payments received from a debt instrument with its value today

34
Q

slides to add to sheet

A

4-17 4-18 4-16 4-20 4-49 4-60

35
Q

consol

A

is a bond with no maturity date that does not repay principal but pays fixed coupon payments forever

36
Q

who sets interest rates

A

the central bank or the market

37
Q

how can investors buy insurance against inflation

A

TIPS treasury inflation protected securities offers rates that keep up with inflation

38
Q

what is the difference between continuos and discrete fisher equation

A

continuos uses addition and discrete uses multiplications

39
Q

Adaptive expectation

A

is the view that expectation change relatively slowly over time in response to new information

40
Q

Who issues what debt instruments
comercial paper fed funds repos treasury bonds
CD’s

A

Treasury bills are short-term debt instruments issued by the United States government to
cover immediate spending obligations, i.e. finance deficit spending. Certificates of deposit
(CDs) are issued by banks and sold to depositors. Corporations and large banks issue
commercial paper as a method of short-term funding in debt markets. Repos are issued
primarily by banks, and funded by corporations and other banks through loans in which
treasury bills serve as collateral, with an explicit agreement to pay off the debt (repurchase
the treasuries) in the near future. Fed funds are overnight loans from one bank to another.

41
Q

3 functions of money

A

Medium of exchange easily standardized widely accepted be divisible easy to carry

Store value used to save purchasing power

Unit of account used to measure economy value

42
Q

Commodity money

A

things like gold or jewels has intrinsic value

43
Q

Fiat money

A

has no intrinsic value like paper

44
Q

M1

A

currency travelers checks demand deposits

45
Q

M2

A

Savings Money market mutual funds shares

Accounting (19 decks)

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