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Economics - Ethan Parmar > Topic 4 - The structure of financial markets > Flashcards

Topic 4 - The structure of financial markets Flashcards

1
Q

What are the functions of money?(4)

A

To allow trade
To give value to goods and services
A store of value and wealth
Allowance for payments to be made at a later date

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2
Q

What are the types of money

A

Broad and Narrow

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3
Q

What is broad money

A

money which is not easily accesed

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4
Q

What is narrow money

A

Easily accessed money

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5
Q

What is the supply of money

A

The total amount/value of money in an economy

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6
Q

Is the value of all the money just cash

A

No, it can be things like houses (assets)

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7
Q

What is liquidity

A

The ease of converting something to cash

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8
Q

What is something that would be liquidable

A

Cash, savings accounts

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9
Q

What is something that would not be liquidable

A

Physical assets, e.g houses

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10
Q

What are the types of markets(4)

A

Financial
Money
Capital
Currency

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11
Q

What is a financial market

A

Where assets are traded, e.g. stock markets

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12
Q

WHat are money markets

A

where short term loans and trades are made (upto 12 months )

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13
Q

What are capital markets

A

Where longer terms trades and loans are made (12 months +)

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14
Q

What are currency markets

A

Where foreign exchange (currency) is traded

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15
Q

What are spot exchange rates in currency markets

A

Where the exxchange of money is done at current exchange rates, done at that moment

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16
Q

What are foward exchange rates

A

Where the exchange of money , is done at a set exchange rate- more likely done over long term or the future

17
Q

What is an asset

A

Something someone owns

18
Q

What is a liability

A

Something someone owes

19
Q

What is equity

A

The assets or percentage people own of something

20
Q

What is debt

A

The amount people owe

21
Q

How can financed be raised(3)

A

Selling shares
Coorporate bonds
Government bonds

22
Q

What are government bonds

A

Where you lend the goevrnment an gareed amount of money, for a set period of time, in return the government will pay you back a ‘coupon’ which is interest in the lent amount, when the period of time is over the lender will get the original amount back - this is called the maturity date.

23
Q

What is a coorporate bond

A

Bonds issued by coorpirations

24
Q

What is the amount of interest earned back also known as

A

A coupon

25
Q

What is the day the bond end also known as

A

The maturity date

26
Q

What is the inverse relationship between bonds and interest rates

A

If bond prices increase, the interest rate(on the bond) will fall

27
Q

What is the formula for calculating the interest on bonds

A

coupon/Bond current price x 100

Economics - Ethan Parmar (73 decks)

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