Ch 2 Basic Finance

Front 1

Money

Back 1

Anything that is gen-erally accepted as a means of payment

Front 2

Liquidity

Back 2

Ease of converting an asset into cash without loss; the depth of a financial market

Front 3

Money Supply

Back 3

Total amount of money in circulation

Front 4

M-1

Back 4

Sum of coins, currency, and demand deposits

Front 5

M-2

Back 5

Sum of coins, currency, demand deposits, sav-ings accounts, and small certificates of deposit

Front 6

Term Structure of Interest Rates

Back 6

Relationship between yields and the time to maturity for debt with a given level of risk

Front 7

Yield Curve

Back 7

Graph relating interest rates and the term to maturity

Front 8

Certificate of deposit (cd)

Back 8

Time deposit issued by a bank with a speci-fied interest rate and maturity

Front 9

Negotiable CD

Back 9

Certificate of deposit issued in amounts of $100,000 or more whose terms are in-dividually negotiated between the bank and the saver and for which there exists a second-ary market

Front 10

Required Reserves

Back 10

Funds that banks must hold against deposit liabilities

Front 11

Required Reserves

Back 11

Funds that banks must hold against deposit liabilities

Front 12

Excess Reserves

Back 12

Reserves held by a bank in excess of those it must hold to meet its reserve requirement

Front 13

Required Reserves

Back 13

Funds that banks must hold against deposit liabilities

Front 14

Excess Reserves

Back 14

Reserves held by a bank in excess of those it must hold to meet its reserve requirement

Front 15

Correspondent Banker

Back 15

Major bank with which a smaller bank has a relationship to facilitate check clearing and to serve as a depository for reserves

Front 16

Required Reserves

Back 16

Funds that banks must hold against deposit liabilities

Front 17

Excess Reserves

Back 17

Reserves held by a bank in excess of those it must hold to meet its reserve requirement

Front 18

Correspondent Banker

Back 18

Major bank with which a smaller bank has a relationship to facilitate check clearing and to serve as a depository for reserves

Front 19

Money market mutual fund

Back 19

Investment company that invests solely in short-term money mar-ket instruments

Front 20

US Treasury Bill

Back 20

Short-term debt instru-ment issued by the federal government

Front 21

Commercial Paper

Back 21

Unsecured short-term promissory notes is-sued by the most cred-itworthy corporations

Front 22

Repurchase agreement (repo)

Back 22

Sale of a short-term security in which the seller agrees to buy back the security at a specified price

Front 23

Banker’s Acceptance

Back 23

Short-term promissory notes guaranteed by a bank

Front 24

Tax Anticipation Note

Back 24

Short-term government security secured by expected tax revenues