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14 Cards in this Set
- Front
- Back
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savers and borrowers receive the benefits of information communicated from the financial system by looking at ------ ------
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asset returns
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as long as financial market participants are informed, the information communicated to them works its way into ----- ----- and -----
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asset returns and prices
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what are the two ways borrowers can raise funds in a primary financial market?
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borrowing or selling shares
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the most commonly used claim a borrow uses that requires them to repay the amount borrowed, the principal, plus a rental fee, or interest.
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debt
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an ownership claim to a share in the profits and assets of a firm
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equity
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a collection of assets
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portfolio
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a type of asset for which the wealth elasticity of demand is less than 1. savers demand these types of assets, such as cash or checking accounts, in order to conduct regular transactions.
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necessity asset
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allocating savings among many different assets to create a more stable return than individual assets making up the portfolio. divides the risk.
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diversification
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implied by the gap between the return on stocks and bonds, but is too large to be explained by risk considerations alone.
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equity premium
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creditors are
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liabilities
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stocks are what kind of claims?
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equity
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Outright purchases and sales are types of
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dynamic transactions
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Repurchase and matched sale-purchase agreements are
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defensive transactions.
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What are the advantages of open market operations?
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Control
Flexibility Ease of implementation |
