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BCIT BUSA 2150 > Finance Quiz 1 - Chapter 1 > Flashcards

Finance Quiz 1 - Chapter 1 Flashcards

1
Q

Shareholder Wealth Maximization

A

The appropriate goal for management decision

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2
Q

The appropriate goal for management decision

A

Shareholder Wealth Maximization

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3
Q

Money Market

A

A financial market for debt securities with maturities of less than one year

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4
Q

A financial market for debt securities with maturities of less than one year

A

Money Market

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5
Q

Capital Market

A

Financial markets for long-term debt and corporate stock

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6
Q

Financial markets for long-term debt and corporate stock

A

Capital Market

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7
Q

Primary Market

A

The markets in which newly issued securities are sold for the first time

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8
Q

The markets in which newly issued securities are sold for the first time

A

Primary Market

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9
Q

Secondary Market

A

Markets where securities are resold after initial issue in the primary markets

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10
Q

Markets where securities are resold after initial issue in the primary markets

A

Secondary Market

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11
Q

Private Market

A

Transactions work out directly between two parties and structures in a manner that appeals to them

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12
Q

Transactions work out directly between two parties and structures in a manner that appeals to them

A

Private Market

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13
Q

Private Markets Securities

A

Securities more tailor-made, less liquid

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14
Q

Securities more tailor-made, less liquid

A

Private Markets Securities

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15
Q

Public Market

A

Standardized contracts are traded on organized exchanges

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16
Q

Standardized contracts are traded on organized exchanges

A

Public Market

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17
Q

Public Markets Securities

A

Securities more liquid, subject to greater standardization

18
Q

Securities more liquid, subject to greater standardization

A

Public Markets Securities

19
Q

Derivatives

A

Claims whose value depends on what happens to the value of some other asset; Futures and options

20
Q

Claims whose value depends on what happens to the value of some other asset; Futures and options

A

Derivatives

21
Q

Investment Banker

A

Middleman between businesses and saves

22
Q

Middleman between businesses and saves

A

Investment Banker

23
Q

Investment Banker Responsibility

A
  1. Assist in the design of corporate securities and then sell them to savers (investors) in the primary markets
  2. A financial intermediary buys securities with funds that it obtains by issuing its securities
24
Q

Mutual Funds

A

A corporation that sells shares in a fund and uses the proceeds to buy stocks, long-term bonds, or short-term instruments

25
Q

A corporation that sells shares in a fund and uses the proceeds to buy stocks, long-term bonds, or short-term instruments

A

Mutual Funds

26
Q

Money Market Funds

A

Mutual funds that invest in short-term debt instruments, with maturities of less than one year

27
Q

Mutual funds that invest in short-term debt instruments, with maturities of less than one year

A

Money Market Funds

28
Q

Production Opportunities

A

The returns available within an economy from investment in productive assets

29
Q

The returns available within an economy from investment in productive assets

A

Production Opportunities

30
Q

Consumption Time Preferences

A

The preferred pattern of consumption; establishes how much consumption they are willing to defer and hence save, at different levels of interest

31
Q

The preferred pattern of consumption; establishes how much consumption they are willing to defer and hence save, at different levels of interest

A

Consumption Time Preferences

32
Q

Foreign Trade Deficits

A

Businesses and individuals in a country impact more goods from foreign countries than are exported; Must be financed by debt

33
Q

Businesses and individuals in a country impact more goods from foreign countries than are exported; Must be financed by debt

A

Foreign Trade Deficits

34
Q

Increase Trade Deficit = Borrowing ? and Interest ?

A

Increase Borrowing = Increase Interest Rates

35
Q

If Central Bank attempts to set interest rates lower than foreign rates

A
  • Foreigners will sell bonds
  • Decrease bond prices
  • Increase interest rates
36
Q

If the market price reflects all relevant information, the observed price =

A

intrinsic price

37
Q

Financial Intermediaries

A

Business organizations that receive funds in one form and repackage them for use by those who need funds

38
Q

Business organizations that receive funds in one form and repackage them for use by those who need funds

A

Financial Intermediaries

39
Q

Increase in money supply =
Decrease in money supply =

A

Lower interest rates
Higher interest rates

40
Q
A

BCIT BUSA 2150 (7 decks)

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