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26 Cards in this Set

  • Front
  • Back
FINANCIAL SYSTEM
Process by which money flows from savers to users.
MAKES UP THE FINANCIAL SYSTEM
Savers
Users
Financial Institutions
Financial Markets
SECURITIES
Financial instruments that serve as obligations of the part of the issuer to provide purchasers with expected or stated returns on the funds invested or loaned.
MONEY MARKET INSTRUMENTS
Short-term debt securities issues by governments, financial institutions, and corporation; investor are paid interest for use of their funds.
GOVERNMENT BONDS
Sold by the US Department of Treasury
MUNICIPAL BONDS
Bonds issued by state or local government; revenue bonds are used toward a project that will produce revenue, general obligation bonds are not.
CORPORATE BONDS
A diverse group and often vary based on the collateral.
BONDHOLDERS
Creditors of a corpooration; selling bonds allows for long term debt capital.
COMMON STOCK
Basic form of corporate ownership; vote on major company decisions, such as purchasing another company; expect cash dividend payments, price appreciation, or both.
PREFERRED STOCK
Recieve preference in the payment of dividends.
CONVERTIBLE SECURITIES
Stockholders given the right to exhange the bond or preferred stock for a fixed share of common stock
FINANCIAL MARKETS
Securities are issued and traded.
PRIMARY MARKET
Firms an governments issue securities and sell them initially to the public.
SECONDARY MARKET
Collection of financial markets in which previously issued securities are traded among investors.
STOCK MARKETS
Market in which shares are bought and sold by investors, such as the New York Stock Exchange.
COMMERCIAL BANKS
The largest and most important financial institution in the United States; 6800 in US; assets of $12 trillion
FDIC
Enacted by Banking Act of 1933; restored public confidence in the banking system; up to $250,000; runs were common before FDIC.
M1
Currency in circulation and balances in bank checking accounts.
M2
M1 + balances in some savings accounts and money market mutual funds
INSIDER TRADING
Use of material nonpublic information about a company to make investment profits.
FED
Central bank of the United States
FINANCIAL INSTITUTIONS
Intermediary between savers and borrower, collecting funds from savers and then lending the funds to individuals, businesses, and governments.
NET WORTH
Differene between what you own and what you owe.
REVENUE BOND
A bond issue whose proceeds will be used to pay for a project that will produce profits, like a toll road or bridge.
GENERAL OBLIGATION BOND
Bond whose proceeds are used to pay for profits that will not produce any revenue.
PENSION
Provide retirement benefits to workers and their familys; funded by regular contributions made by employers and employees. Pension funds have over 4.6 trillion dollars in assets.