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Capital Market > Module 2 > Flashcards

Module 2 Flashcards

1
Q

____ is a market in which financial assets (securities), such as stocks and bonds can be purchased or sold.

A

Financial market

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2
Q

______ are transferred in financial markets when one party purchases financial assets previously held by another party.

A

Funds

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3
Q

_____ facilitate the flow of funds and thereby allow financing and investing by households, firms, and government agencies.

A

Financial markets

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4
Q

______ facilitate the flow of funds and thereby allow financing and investing by households, firms, and government agencies.

A

Financial markets

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5
Q

Those participants who have more money than they spend are referred to as _____

A

surplus units (or investors)

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6
Q

____ they provide their net savings to the financial markets.

A

surplus units (or investors)

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7
Q

Those participants who spend more money than they receive are referred to as ____

A

deficit units

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8
Q

Many deficit units such as firms and government agencies access funds from financial markets by issuing _____ which represent a claim on the seller.

A

securities

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9
Q

_____ represent debt (also called credit, or borrowed funds) incurred by the issuer.

A

Debt securities

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10
Q

Deficit units that issue the debt securities are ____

A

borrowers

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11
Q

The surplus units that purchase debt securities are ____

A

creditors

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12
Q

they receive interest on a periodic basis (such as every six months).

A

creditors

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13
Q

A key role of financial markets is to accommodate ____

A

corporate finance activities

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14
Q

(also called financial management) involves corporate decisions such as how much funding to obtain and what types of securities to issue when financing operations.

A

Corporate finance

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15
Q

Corporate finance also called ___

A

financial management

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16
Q

The _____ serve as the mechanism whereby corporations (acting as deficit units) can obtain funds from investors (acting as surplus units).

A

financial markets

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17
Q

Another key role of financial markets is accommodating surplus units who want to invest in either debt or equity securities.

A

Accommodating investment needs

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18
Q

____ involves decision by investors regarding how to invest their funds.

A

Investment management

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19
Q

The _____ offer investors access to a wide variety of investment opportunities, including securities issued by the government as well as securities issued by corporations.

A

financial markets

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20
Q

____ facilitate the issuance of new securities.

A

Primary markets

21
Q

____ facilitate the trading of existing securities, which allows for a change in the ownership of securities.

A

Secondary markets

22
Q

____ transactions provide funds to the initial issuer of securities

A

Primary market

23
Q

Many types of _____ have a secondary market, so that investors who initially purchase them in the primary market do not have to hold them until maturity.

A

securities

24
Q

____ can be classified as money market securities, capital market securities and derivative securities.

A

Securities

25
Q

Securities can be classified as _____, _____, and _____.

A

Money market securities
Capital market securities
Derivative securities

26
Q

_____ facilitate the sale of short-term debt securities by deficit units to surplus units.

A

Money markets

27
Q

Money markets facilitate the sale of _____ by deficit units to surplus units.

A

short-term debt securities

28
Q

The securities traded in this market are referred to as _____

A

money market securities

29
Q

_____ which are debt securities that have a maturity of one year or less.

A

money market securities

30
Q

_____ facilitate the sale of long-term securities by deficit units.

A

Capital markets

31
Q

Capital markets facilitate the sale of _____

A

long-term securities

32
Q

The securities traded in this market are referred to as ____

A

capital market securities

33
Q

_____ are commonly issued to finance the purchase of capital assets such as buildings, equipment, or machineries.

A

Capital market securities

34
Q

Three common types of capital market securities are ____, ____, and ____

A

bonds, mortgages, stocks

35
Q

____ are long-term debt securities issued by the government agencies and corporations to finance their operations. They provide a return to investors in the form of interest income.

A

Bonds

36
Q

Bonds are ______ issued by the government agencies and corporations to finance their operations. They provide a return to investors in the form of interest income.

A

long-term debt securities

37
Q

They provide a return to investors in the form of interest income.

A

Bonds

38
Q

____ are perceived to be free from default risk because they are issued by the government treasury.

A

Treasury bonds

39
Q

In contrast, bonds issued by corporations are subject to default risk because the issuer could default on its obligation to repay the debt.

A

Treasury bonds

40
Q

_____ are long-term debt obligations created to finance the purchase of real estate.

A

Mortgages

41
Q

____ are debt obligations representing claims on a package of mortgage.

A

Mortgage-backed securities

42
Q

____ or equity securities represent partial ownership in the corporations that issue them.

A

Stocks

43
Q

They are classified as capital market securities because they have no maturity and therefore serve as a long-term source of funds.

A

Stocks

44
Q

____ are financial contracts whose values are derived from the values of underlying assets (such as debt securities or equity securities).

A

Derivative securities

45
Q

Many _____ enable investors to engage in speculations and risk management.

A

derivative securities

46
Q

Derivative securities allow an investor to speculate on movements in the value of the underlying assets without having to purchase those assets.

A

Speculation

47
Q

Financial institutions and other firms can use derivative securities to adjust the risk of their existing investment in securities.

A

Risk management

48
Q

A ____ is a financial security with a value that is reliant upon, or derived from, an underlying asset or group of assets.

A

derivative

49
Q

Stocks
Bonds
Commodities
Currencies
Interest Rates
Market Indices

A

Bonds

Capital Market (2 decks)

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