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31 Cards in this Set

  • Front
  • Back
Asked price
The price at which a dealer will sell a security.
Banker's acceptance
A money market asset consisting of an order to a bank by a customer to pay a sum of money at a future date.
Bid price
The price at which a dealer is willing to purchase a security.
Bid-asked spread
The difference between a dealer's bid and asked price.
Call option
The right to buy an asset at a specified exercise price on or before a specified expiration date.
Capital gains
The amount by which the sale price of a security exceeds the purchase price.
Capital markets
Includes longer-term, relatively riskier securities.
Certificate of deposit
A bank time deposit.
Commercial paper
Short-term unsecured debt issued by large corporations.
Contingent claim
Claim whose value is directly dependent on or is contingent on the value of some underlying assets.
Derivative asset/contingent claim
Securities providing payoffs that depend on or are contingent on the values of other assets such as commodity prices, bond and stock prices, or market index values. Examples are futures and options.
Ownership shares in a firm.
Equivalent taxable yield
The pretax yield on a taxable bond providing an after-tax yield equal to the rate on a tax-exempt municipal bond.
Dollar-denominated deposits at foreign banks or foreign branches of American banks.
Exercise or strike price
Price set for calling (buying) an asset or putting (selling) an asset.
Federal funds
Funds in a bank's reserve account.
Futures contract
Obliges traders to purchase or sell an asset at an agreed-upon price on a specified future date. The long position is held by the trader who commits to purchase. The short position is held by the trader who commits to sell. Futures differ from forward contracts in their standardization, exchange trading, margin requirements, and daily settling (marking to market).
Index fund
A mutual fund holding shares in proportion to their representation in a market index such as the S&P 500.
Limited liability
The fact that shareholders have no personal liability to the creditors of the corporation in the event of bankruptcy.
London Interbank Offered Rate (LIBOR)
Rate that most creditworthy banks charge one another for large loans of Eurodollars in the London market.
Market-value-weighted index
An index of a group of securities computed by calculating a weighted average of the returns of each security in the index, with weights proportional to outstanding market value.
Money market
Includes short-term, highly liquid, and relatively low-risk debt instruments.
Municipal bonds
Tax-exempt bonds issued by state and local governments, generally to finance capital improvement projects. General obligation bonds are backed by the general taxing power of the issuer. Revenue bonds are backed by the proceeds from the project or agency they are issued to finance.
Preferred stock
Nonvoting shares in a corporation, paying a fixed or variable stream of dividends.
Price-weighted average
Weighted average with weights proportional to security prices rather than total capitalization.
Price-earnings ratio
The ratio of a stock's price to its earnings per share. Also referred to as the P/E multiple.
Put option
The right to sell an asset at a specified exercise price on or before a specified expiration date.
Repurchase agreements (repos)
Short-term, often overnight, sales of government securities with an agreement to repurchase the securities at a slightly higher price. A reverse repo is a purchase with an agreement to resell at a specified price on a future date.
Residual claim
Refers to the fact that shareholders are at the bottom of the list of claimants to assets of a corporation in the event of failure or bankruptcy.
Treasury bond or note
Debt obligations of the federal government that make semiannual coupon payments and are issued at or near par value.
Yield to maturity
A measure of the average rate of return that will be earned on a bond if held to maturity.