unit 2 module 3- Financial Market enviroment Flashcards
Financial markets
-an aggregate of possible buyers and sellers of financial securities, commodities, and other fungible items, as well as the transactions between them.
-banks, donation societies, etc.
their objective is to make a profit through investors and borrowers (interest)
Examples of financial markets
Central Banks Retail and Commercial Banks Internet Banks Credit Unions Savings and Loan Associations Investment Banks and Companies Brokerage Firms Insurance Companies Mortgage Companies
derivative
a financial instrument whose value depends on the valuation of an underlying asset; such as a warrant, an option, etc.
capital
money and wealth; the means to acquire goods and services, especially in a non-barter system.
fungible
able to be substituted for something of equal value or utility; interchangeable, exchangeable, replaceable.
long term finance
capital markets are used.
ex. stock and bonds
short term finance
money markets are used
function of financial markets
to allocate capital, matching those who have capital to those who need it.
capital markets
Capital markets especially facilitate the raising of capital
money markets
facilitate the transfer of liquidity
liquitidy
availability of cash over short term; ability to service short-term debt.
Securities act of 1933
ensures investors receive complete and accurate information before they invest
SEC- The U.S. Securities and Exchange Commission
is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation’s stock and options exchanges, and other electronic securities markets in the United States.
regulation S
“safe harbor” that defines when an offering of securities is deemed to be executed in another country and therefore not subject to the registration requirement.
Securities Exchange Act of 1934
a law governing the secondary trading of securities in the United States of America. The Act and related statutes form the basis for the regulation of the financial markets and their participants in the United States.
