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FM (BPP) > Financial Management Environment (5) > Flashcards

Financial Management Environment (5) Flashcards

1
Q

Money market deposits (interest-bearing or discount)?

A

Interest-bearing

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2
Q

Certificates of deposit (interest-bearing or discount)?

A

Interest=bearing

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3
Q

Repurchase agreements (interest-bearing or discount)?

A

Interest-bearing

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4
Q

Treasury bill (interest-bearing or discount)?

A

Discount

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5
Q

Bank bills or acceptance credits (interest-bearing or discount)?

A

Discount

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6
Q

Commercial paper (interest-bearing or discount)?

A

Discount

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7
Q

Bill of exchange (interest-bearing or discount)?

A

Discount

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8
Q

What are money market deposits?

A

Very short-term loans normally between banks

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9
Q

What are certificates of deposit?

A

Certigficate of receipt for funds deposited at a financial institution for a specified term and paying interest (coupon rate) at a specified rate on a specified date

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10
Q

What are repurchase agreements?

A

An agreement between two parties under which one party agrees to sell a financial instrument on an agreed date for an agreed price and simulataneously buy back isntrument at a later date for a higher price

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11
Q

What is a treasury bill?

A

Debt instruments issued by givernment with maturities ranging from one month to one year

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12
Q

What is a bank bill?

A

Sold by and guaranteed by a bank on behalf of a comapny for up to 180 days of credit

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13
Q

What are commercial paper?

A

Short-term unsecured corporate debt with maturity up to 270 days. Issued by organisations with good credit ratings

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14
Q

What is bill of exchange/

A

An IOU signed by a customer which can be sold on the market raise and only used for significant transactions

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15
Q

What are capital markets for?

A

Raising long-term finance

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16
Q

What are the principal capital markets?

A

Stock Exchange “main market”

More loosely regulated alternative investment market

17
Q

How do firms obtain long or medium-term finance?

A

Through issuing share capital or debt capital

18
Q

What are firms that issue share capital doing/

A

Inviting investors to take an equity stake in the business, or to increase their existing equity stake

19
Q

How may long-termd ebt capital be raised?

A

In form of loan notes which are IOUs committing a company to paying interest over a significant time period, normally 5 years or more

20
Q

Least risky instrument for an investor

A

Bonds/loan notes

21
Q

2nd least risky instrument for an investor

A

Junk bonds

22
Q

2nd most risky instrument for an investor

A

Shares traded on main stock market

23
Q

Most risky instrument for an investor

A

Shares in alternative investment market

FM (BPP) (52 decks)

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