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25 Cards in this Set

  • Front
  • Back
Flow of Funds
Movement of funds through the financial system
Financial System
Comprises a range of financial institutions, instruments markets that facilitate transactions for goods and services and financial transactions
Double coincidence of wants
Two parties coming together to conduct a transaction that meets their mutual needs.
Divisibility problem
Where a transaction is difficultly to carry out because the medium of exchange does not represent equal value.
A commodity that is universally accepted as a medium of exchange.
Surplus units
Savers of funds which are then available for lending
Deficit Units
Borrowers of funds for capital investment an consumption.
Financial Instruments
Issued by a party raising funds, acknowledging a financial commitment and entitling the holder to specified future cash flows.
Rate of Return
The financial benefit gained from the investment of savings; usually expressed in percentage terms
Return or Yield attriute
The total financial compensation received from an investment expressed as a percentage of the amount invested.
Liquidity Attribute
The ability to sell an asset within a reasonable time, at the current market value and for reasonable transaction costs.
Time-pattern of cash flows attribute
When the specified or expected cash flows related to a financial asset are to be received by an investor.
Portfolio Structuring
A combination of assets and liabilities; each asset and liability comprising desired attributes of return, risk, liquidity and timing of cash flows.
Monetary Policy
Briefly, actions of the central bank that influence the level of interest rate in order to achieve certain economic performance outcomes.
The sum of the financial interest an investor has in asset; an ownership position.
Ordinary Shares
A form of Equity that gives limited ownership rights in a corporation.
The amount of a corporation's after-tax earnings distributed to shareholders.
Hybrid Security
A financial instrument that incorporates the characteristics of both debt and equity; for example a preference share or a convertible note.
The winding-up of a company through the sale of its assets and the payments of liabilities.
Debt Instruments
Represents the contractual conditions of a loan that must be repaid, including the issuer/borrower, amount, cost, timing of cash flows and maturity date.
Secured Debt
A situation where a lender has a claim over specified assets of the borrower, or a third party, in the event that the borrower defaults on loan payments.
Negotiable Debt Instrument
A debt instrument that can be sold by original lender and traded in the financial markets.
Derivative Instrument
A synthetic security that derives its pricing from a physical market commodity or security, and its used primarily to manage a price risk exposure
Futures Contract
An agreement to trade a specific commodity or financial asset of a specified quantity and quality, at a pre-determined price, at a specified future date.
Forward Contract
An over-the-counter contract negotiated with a bank that locks in a price today that will be applied at a specified future date, Includes a forward rate agreement and a forward foreign exchange contract.