The role of money and financial markets Flashcards
Money
Anything that is acceptable as a means of payment for goods and services
Medium of exchange
Anything that sets the standard of value of goods and services acceptable to all parties involved in a transaction
Financial sector
Consists of financial organisations and their products and involves the flow of capital
Investment
The purchase of capital goods that are used to produce future goods and services. It is also an asset purchased to provide income in the future and/or to be sold for profit
Interest rate
The cost of borrowing money, i.e. that which is paid to the lender. It is also the reward for saving
Building societies
Mutual financial organisations that are owned by their members
Mortgage
An agreement with a financial institution to borrow money to purchase a property
Insurance company
Financial institution that guarantees compensation for specified loss, damage, illness or death in return for an agreed premium
Banks
Financial institutions licensed to receive deposits and make loans
Insurance
A contract, reperesented by a policy, in which an individual or organisation receives financial protection, or reimbursement against losses, from a insurance company
Saving
The part of an individual’s income which is not spent on consumption
Borrowing
Receiving money (or something of value) in exchange for an obligation to pay it back at a specified time in the future
