unit 15: functions of financial market Flashcards
tacn1
what is the main function of financial markets?
It’s CHANNELING funds from people who have saved SURPLUS funds (lender-Saver) to those who have A SHORTAGE OF funds (borrower-Spender).
surplus=excess
what is the financial market?
A financial market is a market in which FINANCIAL INSTRUMENTS are traded: cash, bonds, shares,…
what is a monetary contract?
(ít vào)
is a contract relates to MONEY or IN THE FORM OF MONEY.
Ex: she betrayed me for monetary again.
-contract: both parties must sign employment contracts.
what does the term “DIRECT FINANCE” mean?
is finance raised through FINANCIAL MARKETS.
what does the term “indirect finance” mean?
is finance raised through FINANCIAL INTERMEDIARIES.
How many categorizations of financial markets are mentioned in the text?
There are 4 categorizations of financial markets are mentioned. they are:
- Debt and Equity markets
- Primary and Secondary markets
- Exchanges and Over-the-Counter Markets.
- Money and Capital Markets.
What are the differences between debt market and Equity market?
what is a mortgage?
is a DEBT instrument - an agreement that allows you to borrow money from a bank or similar organization,
what is a debt instrument?
is a contractual agreement by the borrower to pay the holder of instrument FIXED dollar amount at REGULAR intervals until a SPECIFIED DATE (the maturity date)
Do shareholders of a corporation receive fixed dollar amounts at regular intervals?
No, they don’t. Because it depends on the number of their share in the company, and the firm’s net income and the firm’s asset.
In Which type of financial markets are fresh shares issued and sold?
Primary market.
Why are the primary market for securities not well known to the public?
Because the selling of securities to intial buyers often takes place behind closed doors.
On the basis of the maturity of the securities traded in each market, what are financial markets classified into?
Money and Capital Market.
what is the advantages and disadvantages of owning equities?
- Advantage: equity holders benefit DIRECTLY from any increases in the corporation’s profitability or asset value.
- disadvantage: they are the last person to be paid.
What are the differences between Primary and secondary markets?
what are the functions of secondary market?
Secondary market:
- make financial instruments more liquid
- determine the price of the security that the issuing firm sells in the primary market.
What is the exchanges market?
exchanges market is the financial market in which transactions are MADE IN A CENTRAL LOCATION.
what is an OTC market?
an OTC market is the financial market in which transactions are made in DIFFERENT LOCATIONS through telephone or computer.
What is the difference between Exchanges market and OTC market?
What is the money market?
a money market is a financial market in which SHORT TERM DEBT INSTRUMENTS are traded.
What is a capital market?
a capital market is a financial market in which LONGER TERM DEBT INSTRUMENTS and EQUITY INSTRUMENTS are traded.
What is the difference between money market and capital market?
