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10 Cards in this Set
- Front
- Back
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Lenders |
Households most likely to be lenders |
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Borrowers |
Most likely to be businesses |
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Ways of Classifying Financial Markets |
1. Instrument: Debt Market/ Equity Market 2. Identities of B & S: Primary/ Secondary 3. By ST or LT: ST less 1 year, LT 10+ years |
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Commercial Paper |
ST Loans by companies |
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Federal Funds |
Inter Bank loans |
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Repo Agreements |
Inter bank Loans with collateral involved |
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US Government Agency Securities |
Fannie Mae, Freddie Mac |
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Why go through Fina Intermediaries |
1. Lower transaction costs 2. Provide diversification 3. Deal with asymmetric information |
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Asymmetric Information |
When one individual knows more information than another |
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Adverse Selection |
Occurs before transaction happens. When bankers have slackers applying for the loan |
