Brainscape's Knowledge GenomeTM

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


See full index

ACF101 summer term > TOPIC 1 - financial markets > Flashcards

TOPIC 1 - financial markets Flashcards

1
Q

real assets meaning

A

Assets that produce goods and services

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

Financial assets meaning

A

Claims to the income from real assets

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

What does real assets generate

A

Income

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

Financial assets are often called?

A

Securities

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

What are traded in financial markets

A

Securities

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

Examples of securities

A

Bonds and common stock

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

What is a financial market

A

Where securities are traded

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

Financial markets enable what?

A

The exchange of previously issued securities

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

What do financial markets facilitate

A

Capital raising by enabling new issues of securities

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

Example of a financial market

A

London stock exchange

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

What is a primary market

A

Where new security issues are sold to the initial buyers

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

Whats a common way for firms to raise capital

A

by selling initial securities

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

What are investment banks elected to manage

A

capital raising

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

What is a secondary market

A

Where previously-issued stocks are traded

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Common stock represents what

A

An ownership stake in a firm

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

Each common stock gives the holder the right to

A

Have one vote in annual meetings
Have a share in the dividends paid

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

Who do shareholders elect

A

The board of directors

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

What is a stock market index

A

A performance measure of a group of stocks in the market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Example of a stock market index

A

S&P 500, FTSE 100

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

A stock market index is often interpreted as what

A

A measure for the whole stock market

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What are the issues with using indexs as the entire market

A

Are the firms representative of the whole market
How are individual firms weighted

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What are the main differences in preferred stocks

A

Firms pay dividends to them first
No voting rights

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Whats more risky PS or CS

A

PS as dividends prioritized

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

The dividends in PS are what

A

Cumulative and prioritized

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Sometimes PS can be converted to what

A

A fixed number of CS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Whats the IPO

A

Initial public offeringW

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is IPO

A

A company’s first equity issue made available to the public

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

When do IPOS occur

A

When a privately held company decides to go public

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

What is a SEO

A

Secondary equity offering

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

When do SEOs occur

A

When an already publicly traded company issues additional equity

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

What is it called when you lend money in the short run

A

Short-term fixed-income securites

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

What does short term mean in money markets

A

A maturity of less than a year

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Why are money market securites generally low risk

A

AS most trade in large denominations so households can buy a little bit of the large diverse portfolio

31
Q

What is a certificate of deposit

A

A time deposit with a bank - depositor may not withdraw before the maturity date

32
Q

When are principals and interest paid by the bank

A

At the end of the fixed term

33
Q

Where can certificates of deposit be bought

A

From banks or from a broker

34
Q

Who backs treasury bills

A

The government

35
Q

Why are treasury bills considered the least risky money market

A

As they are backed by the government so wont default

36
Q

Where can Treasury bills be purchased from

A

Directly at auction or a government security dealer

37
Q

What is a commercial paper

A

A short-term unsecured debt note, issued by well known companies

38
Q

Where are commercial papers often traded

A

Through dealers

39
Q

What type of security is a commercial paper

A

Discount security

40
Q

What maturities are in bond markets

A

Over one year

41
Q

What is a bond

A

A debt security that is committed to pay back to the holder the principal and coupon

42
Q

What is a bond principal

A

The cash amount borrowed and paid back at maturity

43
Q

What is a bond coupon

A

The periodic interest payments

44
Q

Where are most bonds traded

A

At over-the-counter dealer markets

45
Q

What are treasury notes

A

Government bond backed by US gov,maturities up to 10 years

46
Q

What are treasury bonds

A

A gov bond issued by the US gov

47
Q

what is a gilt

A

Government bonds of the UK and other commonwealth countires

48
Q

What is a corporate bond

A

Refers to a bond issued by a corporation

49
Q
A
50
Q

What is a secured bond

A

Supported by collateral in event of bankruptcy

51
Q

What are unsecured bonds

A

No collateral

52
Q

What are callable bonds

A

Gives the issuing firm the right ot repurchase at a set price

53
Q

What is a convertible bond

A

Investors can convert bonds into a set amount of equity shares

54
Q

What bond protects against inflation

A

treasury inflation protected securities

55
Q

What bonds are issued by states and local governments

A

Municipal bonds

56
Q

What are eurobonds

A

Bonds in another currency - Euros in this case

57
Q

Financial markets are generally very what

A

Competitive

58
Q

Investments face a what

A

Risk-return trade-off

59
Q

What does financial markets being competitive imply

A

Markets are efficent
Investments have risk to profit ratio

60
Q

Why are financial markets important

A

Allow optimal allocation of funds
Optimal allocation of risk
Allows smooth consumption

61
Q

Who are the key players in the financial markets

A

Capital providers
Capital recipients

62
Q

What are capital providers

A

People who supply funds for a future return

63
Q

What are capital recipients

A

People who seek funds for their investments at the cost of interest payments

64
Q

What third parties are there in markets

A

Financial intermediates - banks
Brokers
Dealers
Investment bankers

65
Q

What do financial intermediaries do

A

Receive money from capital providers and reinvest the proceeds to capital recipients

66
Q

What do commercial banks do

A

Recieve deposits from savers and re-lend the money to borrowers

67
Q

What is a commercial banks profit

A

The difference in borrowing and lending interest rates

68
Q

How do investment companies work

A

Receive capital from a pool of investors and reinvest that in various securities - charge a fee to make money

69
Q

What is a broker

A

A commissioned agent of a buyer who allows trade by locating a seller to complete

70
Q

What does a broker not do in the asset they trade

A

Take a position - they do not maintain inventory

71
Q

What are the profits for a broker

A

The commission they charge on their sales

72
Q

Whats the difference between dealers and brokers

A

Dealers do take a position and no commission - buying shares and selling them themselves

73
Q

How do dealers make profits

A

Buying assets at a lower price and reselling them at a higher price

74
Q

What are the 3 activites an investment banker does

A

advise
Underwriting
Sales assistance

75
Q

What advising do investment bankers do

A

Advising companies whether they should issue bonds and stocks and what conditions

76
Q

What underwriting role do investment bankers use

A

Guaranteeing companies a price on the securities they issue

77
Q

What sales assistance role do investment bankers do

A

Assisting in the sale and marketing of new securities

ACF101 summer term (4 decks)

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