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31 Cards in this Set

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Describe money markets
They are a sub sector of the debt market. Consist of very short term securities that are highly marketable
Describe T-Bills
Short term government securities. They are discounted from face value and do not pay coupon. 28, 91, and 182 day maturities. Highly liquid. Taxable at the Federal Level, but are exempt at the state and local level
Ask Price
The price I would pay a securities dealer to buy a security
Bid Price
The price a security dealer would pay me for a security
Describe a CD
A bank time deposit. Short term and highly marketable
Commercial Paper
Short term unsecured debt issued by large corporations. Maturities up to 270 days, anything over requires SEC approval, consequently they are less popular
Banker Acceptances
An order to a bank by a customer to pay a sum of money at a future date. Post dated check. Traded on the secondary market. Considered to be very safe assets
Eurodollars
Dollar-denomiated deposits at a foreign bank of foreign branches of american banks
Repos and Repurchases
Short term sale of government securities with an agreement to repurchase the securities at a higher price
Broker Calls
When an investor buys stock on margin, the broker borrows money from the bank and agrees to repay it on call. Usually charges about one percent to provide this service
Federal Funds
Funds in the accounts of commercial banks at the Federal Reserve Bank
LIBOR
London Interbank Offer Rate. Lending rate among banks in the London market
Fixed Income Capital Market
Bonds that pay a fixed stream of payments
Treasury Notes
1-10 year maturities.
T-Bonds
10-30 Year maturities
Name the Federal Agency Debt agencies
Freddie Mac, Fannie Mae, Ginnie Mae. They were organized to provide liquidity to the mortgage market
International Bonds
Eurobond is denominated in a country other than the country in which it is issued.
Municipal Bonds
Revenue Bond
General Obligation Bond
Tax exempt, issued by the state and local government. General obligation bonds: Backed by full faith and credit of the issuer. Revenue Bond: Issued to finance a project and are repaid by the revenue of the issuing agency or the revenue of the project itself
Equivalent Taxable Yield Equation
r=rm/(1-t)
Corporate Bonds
Long term debt issued by private corporations typically paying semiannual coupons and returning the face value of the bond at maturity
Mortgage Backed Security
Either a claim in a pool of mortgages or an obligation that is secured by such a pool
Depository receipts
American Depository Receipts represent shares of a foreign company
Dow Jones Industrial Average
30 blue chip companies. Since 1896. Uses the Price-Weighted Average
Price-Weighted Average
An average computed by adding the prices of the stocks and then dividing by a divisor. (Split adjusted)
S&P 500
An index of 500 firms. Uses a Market-Weighted Average
Market-Weighted Average
Computed by calculating a weighted average of the returns of each security in the index, with the weights proportionate to outstanding market value
Equal-Weighted Average
An index computed form a simple average of returns
Derivative Assets or Contingent Claim
A security with a payoff that depends on the prices of other securities
Call Options
The right to buy an asset at a specific price on or before a specific expiration date
Put Option
The right to sell an asset at a specific exercise price on or before a specific expiration date
Futures Contracts
Obliges traders to purchase or sell an asset at an agreed upon price at a specified future date