Module 2 Flashcards

1
Q

SAVERS

A

Households
-Individuals
-Corporations/Companies -Government Agencies

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2
Q

Financial Intermediaries

A

-Banks
-Insurance Companies
-Stock Exchange
-Stock brokerage firms
-Mutual Funds

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3
Q

Users of Funds (Borrowers/Investors)

A

-Households
-Individuals
-Corporations/Companies -Government Agencies

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4
Q

links the savers and the users of funds.

A

financial system

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5
Q

are companies in the financial sector that provide a broad range of business and services including banking, insurance, and investment management.

A

Financial institutions

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6
Q

which use the deposited funds to provide commercial loans to firms and personal loans to individuals,

A

Commercial Banks

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7
Q
  • Individuals purchase insurance (life, property and casualty, and health) protection with insurance premiums.
A

Insurance Companies

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8
Q

examples of financial institutions/Intermediaries

A

Commercial banks
Insurance banks
Mutual funds
Pension Funds

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9
Q

owned by investment companies that enable small investors to enjoy the benefits of investing in a diversified portfolio of securities purchased on their behalf by professional investment managers.

A

Mutual funds

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10
Q

Financial institutions that receive payments from employees and invest the proceeds on their behalf.

A

Pension Funds

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11
Q

-is a real or a virtual document representing a legal agreement involving some sort of monetary value.

A

Financial Instruments

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12
Q

is any asset that is:
• Cash

A

Financial Asset

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13
Q

is any liability that is a contractual obligation:

A

Financial Liability

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14
Q

is any contract that evidences a residual interest in the assets of an entity after deducting all liabilities.

A

Equity Instrument

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15
Q

generally have fixed returns due to fixed interest rates.

A

Debt Instruments

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16
Q

These bonds and bills have usually low interest rates and have very low risk of default since the government assures that these has been paid.

A

Treasury bonds and treasury bills

17
Q

Financial instruments

A

Financial asset
Financial liability
Equity Instrument
Debt Instruments

18
Q

issued by publicly listed companies.

A

Corporate Bonds

19
Q

generally have varied returns based on the performance of the issuing company.

A

Equity Instruments

20
Q

has priority over a common stock in terms of claims over the assets of a company.

A

Preferred Stock

21
Q

on the other hand are the real owners of the company.

A

Holders of Common Stock

22
Q
  • refers to a marketplace, where creation and trading of financial assets, such as shares, debentures, bonds, derivatives, currencies, etc. take place.
A

Financial Market

23
Q

. To raise money, users of funds will go to a primary market to issue new securities (either debt or equity) through a public offering or a private placement.

A

Primary vs. Secondary Markets

24
Q

sale of new securities to the public referred to as a public offering and the first offering of stock named an

A

initial public offering.

25
Q

sale of new securities to one investor or a group of investors (institutional investors) is referred to as a

A

private placement.

26
Q

The sale of previously owned securities takes place in

A

secondary markets.

27
Q

are a venue wherein securities with short-term maturities (1 year or less) are sold.

A

Money markets

28
Q

are bonds (long-term debt) and both common stock and preferred stock (equity, or ownership).

A

capital market securities