Financial Markets and Institutions Flashcards
This deck only covers KEY definitions. Read Notion for key concepts, maths, and theories.
What is a treasury bill?
Short term US government obligations.
Define federal funds.
Short term funds transferred between financial institutions, usually for no more than a day.
Define repurchase agreements.
Agreements involving security sales by one party to another, with the promise to reverse the transaction at a specified date and price, usually at a discounted price.
What is commercial paper?
Short term unsecured promissory notes that companies issue to raise short term cash (sometimes called paper).
What are negotiable certificates of deposits?
Bank-issued time deposits that specify an interest rate and maturity date and are negotiable - that is, traded on an exchange. their face value is usually at least $100,000.
What are treasury notes and bonds?
US treasury long term obligations issued to finance the national debt and pay for other federal government expenditures.
What are US government agency bonds?
Long term debt securities collateralised by a pool of assets and insured by agencies of the US government.
What are state and local government bonds?
Debt securities issued by state and local governments (e.g. country, city, school), usually to cover capital (long term) improvements.
What are mortgages?
Long term loans issued to individuals or businesses to purchase homes, pieces of land, and other real property.
What are mortgage-backed securities?
Long term debt securities that offer expected principal and interest payments as collateral. these securities, made up of many mortgages, are gathered into a pool and are thus ‘backed’ by promised principal and interest cash flows.
Define corporate bonds.
Long term debt securities issues by corporations.
Define corporate stocks.
Long term equity securities issued by public corporations; stock shares represent fundamental corporate ownership claims.
Define inflation.
The percentage increase in cost of goods or services over a given period of time.
Define default/credit risk.
The risk that the issuer fails to pay promised interest and principal.
