MONEY MARKET AND INTEREST RATE Flashcards
It is a means of payment for goods and services or repayment of debts which serves as an asset to the holder.
money
The financial system works on an entirely fiduciary basis.
money
It is an economic unit that functions and recognized as a medium of exchange for transactional purposes in the economy.
money
It is a contract in which the vendor of a security agrees to repurchase it from the buyer at an agreed price.
term repurchase agreements
It is the total value of money available in an economy at a point in time.
money supply
It includes all coins and paper money issued by the government and the banks.
currency
It includes all coins and paper money issued by the government and the banks.
M4 (L) - High-grade commercial papers
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.
M4 (L) - High-grade commercial papers
It is an instrument that represents a promised future payment by a bank.
bank acceptance note
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.
M1. Narrow Measure
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.
M4 L
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.
M2. Intermediate Measure
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.
M3 Broad Measure
What are the role or functions of money in the economy?
- Medium of exchange - money is accepted freely in exchange for all other goods
- A measure of value - it acts as a common measure of value. It is a unit of account and a standard of measurement.
- Store of value - money is a convenient form to store wealth.
- Standard of deferred payments - it forms the basis for credit transactions.
Difference between treasury bills, notes, and bonds
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.
What is the most fundamental type of commercial paper?
Promissory note - It is a written pledge to pay money. It is a two-part paper.