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18 Cards in this Set
- Front
- Back
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Money markets
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markets that trade debt securities or instruments with maturities of less than 1 year
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Opportunity cost
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the forgone interest cost from the holding of cash balances when they are received
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Default risk
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the risk of late or non-payment of principal or interest
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Treasury Bills
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short term obligations of the US government issued to cover government budget deficits and to refinance maturing government debt
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Treasury Bill auctions
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the formal process by which the US Treasury sells new issues of treasury bonds
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Federal funds
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short term funds transferred between financial institutions usually for a period of 1 day
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Federal Funds rate
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the interest rate for borrowing federal funds
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Correspondent Banks
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banks with reciprocal accounts agreements
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Repurchase agreement
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an agreement involving the sale of securities by one party to another with a promise to repurchase the securities at a specified price and on a specified date
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Reverse Repurchase agreement
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an agreement involving the purchase of securities by one party from another with the promise to sell them back
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Commercial paper
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an unsecured short term promissory note issued by a company to raise short term cash often to finance working capital requirements
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Negotiable certificate of deposit
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a bank issued fixed maturity interest baring time deposit that specifies an interest rate and maturity date and is negotiable
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Bearer instrument
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an instrument in which the holder at maturity receives the principal and interest
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Banker’s acceptance
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a time draft payable to a seller of goods with payment guaranteed by a bank
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Eurodollar market
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the market in which the Eurodollars are traded
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London Interbank Offered Rate (LIBOR)
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the rate paid on Eurodollars
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Eurodollar CD’s
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dollar denominated deposits in non-US banks
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Eurocommercial paper
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eurosecurties issued in Europe by dealers of commercial paper without involving a bank
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