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23 Cards in this Set

  • Front
  • Back
Real Assets
Assets used to produce goods and services
Financial Assets
Claims on real assets or the income generated by them
Commitment of curent resources in the expectation of derving greater resources in the future
An ownership share in a corporation.
Derivative Securities
Securities providing payoffs that depend on the values of other assets.
Fixed-income securities
Pay a specified cash flow over a specific period.
Agency Problems
Conflicts of interest between managers and stockholders.
Asset allocation
Allocation of an investment portfolio across broad asset classes.
Security Selection
Choice of specific securities within each asset class
Security Analysis
Analysis of the value of securities
Risk-return trade-off
Assets with higher expected returns entail greater risk.
Passive management
Buying and holding a diversified portfolio without attempting to identify mispriced securities.
Active management
Attempting to identify mispriced securities or to forecast broad market trends.
Financial Intermediaries
Institutions that "connect" borrowers and lenders by accepting funds from lenders and loaning funds to borrowers.
Investment Companies
Firms managing funds for investors. An investment company may manage several mutual funds.
Investment bankers
Firms specializing in the sale of new securities to the public, typically by underwriting the issue.
Primary market
A market in which new issues of securities are offered to the public.
Secondary market
Previously issued securities are traded among investors.
Tendency toward a worldwide investment environment, and the integration of international capital markets.
Pass-through securities
Pools of loans (such as home mortgage loans) sold in one package. Owners of pass-throughs receive all of the principal and interest payments made by the borrowers.
Poling loans into standardized securities backed by those loans, which can then be traded like any other security.
Bundling, unbundling
Creation of new securities either by combining primitive and derivative securities into one composite hybrid or by separating returns on an asset into classes.
Financial engineering
The process of creating and designing securities with custom-tailored characteristics.