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25 Cards in this Set
- Front
- Back
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financial intermediation
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the process of transfering funds from surplus economic units to deficit economic units
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how do firms obtain funds?
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by issuing financial (paper) assets: money-market instruments, capital-market instruments, and money
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money-market instruments
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those whose maturities are less than one year
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capital-market instruments
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those whose maturities are longer than one year
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money
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used as a medium of exchange, store of value, and a standard of value
coins, currency, demand deposits, and NOW accounts |
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M-1
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demand deposits at commercial banks, currency in circulation, balances in NOW accounts, + other transaction accounts at financial institutions
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M-2
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M-1 + savings and small-denomination time-deposit accounts, + money market mutual fund shares
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M-3
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M2 + large-denomination time deposits
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L
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M-3 + other liquid assets such as commercial paper, T Bills, etc
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depository financial institutions
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commercial banks, savings & loan associations, & credit unions
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money markets
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group of markets where short-term instruments are traded
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short term instruments
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T bills, commercial paper, bankers' acceptances, negotiable cds, repurchase agreements, & federal funds
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T bills
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direct obligations of the US gov't
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commercial paper
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short-term unsecured promissory notes sold directly or through dealers by finance companies & certain industrial concerns
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bankers' acceptances
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short-term credit instruments that aries out of foreign transactions
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negotiable cds
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formal negotiable receipts for funds left with the bank for a specified period of time, usually 30 days to a year
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repurchase agreements
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arrangements whereby a securities dealer sells its short-term securities with a simultaneous agreement to buy them back later
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federal funds
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loans btw banks on an overnight basis
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capital markets
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deal in long-term securities such as stocks, bonds, and mortgages
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primary market
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where the firm sells its new securities
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secondary market
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market where securities have already been issued and sold
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bond
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a written promise to make payments of interest and principal on a specified future date to the holder of the bond
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types of bonds
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US treasury issues, US agency issues, municipal issues, corporate bonds
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stocks
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common stocks & preferred stocks
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forms of business organization
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sole proprietorship, partnership, corporation
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