Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Financial Markets > MONEY MARKET AND INTEREST RATE > Flashcards

MONEY MARKET AND INTEREST RATE Flashcards

1
Q

It is a means of payment for goods and services or repayment of debts which serves as an asset to the holder.

A

money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

The financial system works on an entirely fiduciary basis.

A

money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

It is an economic unit that functions and recognized as a medium of exchange for transactional purposes in the economy.

A

money

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

It is a contract in which the vendor of a security agrees to repurchase it from the buyer at an agreed price.

A

term repurchase agreements

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

It is the total value of money available in an economy at a point in time.

A

money supply

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

It includes all coins and paper money issued by the government and the banks.

A

currency

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

It includes all coins and paper money issued by the government and the banks.

A

M4 (L) - High-grade commercial papers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

It is an unsecured short-term debt instrument issued by a corporation, typically for the financing of accounts payable and inventories or meeting short-term liabilities.

A

M4 (L) - High-grade commercial papers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

It is an instrument that represents a promised future payment by a bank.

A

bank acceptance note

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

It includes currency, traveler’s checks, demand deposits, and other checkable deposits.

It is often referred to as the narrowest measure of the money supply.

A

M1. Narrow Measure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

It includes currency, traveler’s check, demand deposits, and other checkable deposits.

It includes savings deposits and balances in retail money market funds.

It includes large time deposits, balances in institutional money market funds, and term repurchase agreements.

It includes liquid and near liquid assets such as short-term treasury bills, high-grade commercial paper, bank acceptance notes.

A

M4 L

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

It includes currency, traveler’s checks, demand deposits, and other checkable deposits.

It includes saving deposits and balances in retail money markets funds.

It refers to money used as a store of value.

A

M2. Intermediate Measure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

It includes currency, traveler’s check, demand deposits, and other checkable deposits.

It includes saving deposits and balances in retail money market funds.

It includes large time deposits, balances in institutional money market funds, and term repurchase agreements.

A

M3 Broad Measure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the role or functions of money in the economy?

A
  1. Medium of exchange - money is accepted freely in exchange for all other goods
  2. A measure of value - it acts as a common measure of value. It is a unit of account and a standard of measurement.
  3. Store of value - money is a convenient form to store wealth.
  4. Standard of deferred payments - it forms the basis for credit transactions.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Difference between treasury bills, notes, and bonds

A

Treasury bills have maturities of a year or less

Treasury notes are issued with maturities from 2 to 10 years.

Treasury bonds are long-term investments and mature to 10 to 30 years from issue date.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is the most fundamental type of commercial paper?

A

Promissory note - It is a written pledge to pay money. It is a two-part paper.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

It is the amount charged on top of the principal by the lender to the borrower.

A

interest rate

18
Q

What are the 2 main sources of cost capital?

A

Cost of equity (shareholder - dividend),

and cost of loans (banks - interest)

19
Q

What are the 2 things that shareholders expect to return?

A

Dividends

Share Price Appreciation

20
Q

It is the expectations of the shareholders in the company.

A

Cost of share funds (equity)

21
Q

It is the amount the lender charges for the use of assets expressed as % of the principal.

A

Interest rates

22
Q

TRUE OR FALSE. Saving accounts and certificate of deposit use compound interest.

A

TRUE

23
Q

Money invested in a bank today will be much more in 10 years’ time.

A

time value of money

24
Q

TRUE OF FALSE. Interest is similar to the fee or processing fee.

A

FALSE

25
Q

What does the equation of exchange means?

A

It states that the actual total value of all money expenditure (MV) is always equal to the actual total value of all items sold (PY)

26
Q

It is the money paid regularly at a particular % for the use of money lend or for delaying the repayment.

A

interest

27
Q

TRUE OR FALSE. Most mortgages use simple interest.

A

TRUE

28
Q

It is the interest rate that is earned at a bank or credit union from a savings account or certificate of deposits.

A

Annual Percentage Yield

29
Q

TRUE OR FALSE. Consumer loans typically use compound interest.

A

FALSE. Consumer loans typically use Annual Principal Rate and do not use compound interest.

30
Q

How do companies determine which source of funding will be the least expensive?

A

By weighing the cost of borrowing and cost of equity.

31
Q

What are the sources of demand?

A

Transaction demand

Precautionary demand

Speculative demand

32
Q

What does demand money mean?

A

It is the desired holding of financial assets in form of money, cash, or bank deposits rather than investment.

33
Q

What are the factors that affect the demand for money?

A
  1. Level of income
  2. Interest rates and Inflation
  3. Uncertainty about the future
34
Q

It is the mathematical expression of the quantity theory of money.

A

Equation of exchange

35
Q

What is the formula of the equation of exchange?

A

MV=PY

M = money supply

V= velocity of money

Price = price level

Y = volume of transaction

36
Q

It is the measure of money or the number of times that the average unit of currency is used to purchase goods.

A

Velocity of money

37
Q

2 Impact of money.

A
  • Higher interest rate decrease investment

- Higher peso will decrease exports recruiting in slower GDP growth.

38
Q

states that the money supply and price level in an economy are in direct proportion to one another.

A

Quantity Theory

39
Q

is evaluated to achieve an optimal capital structure.

A

cost of capital

40
Q

It is the cost of the company’s funds and may be either debt or equity or both.

A

cost of capital

41
Q

It is the minimum return that investors expect for providing capital

A

cost of capital

Financial Markets (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions