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25 Cards in this Set
- Front
- Back
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Flow of Funds
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Movement of funds through the financial system
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Financial System
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Comprises a range of financial institutions, instruments markets that facilitate transactions for goods and services and financial transactions
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Double coincidence of wants
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Two parties coming together to conduct a transaction that meets their mutual needs.
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Divisibility problem
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Where a transaction is difficultly to carry out because the medium of exchange does not represent equal value.
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Money
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A commodity that is universally accepted as a medium of exchange.
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Surplus units
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Savers of funds which are then available for lending
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Deficit Units
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Borrowers of funds for capital investment an consumption.
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Financial Instruments
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Issued by a party raising funds, acknowledging a financial commitment and entitling the holder to specified future cash flows.
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Rate of Return
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The financial benefit gained from the investment of savings; usually expressed in percentage terms
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Return or Yield attriute
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The total financial compensation received from an investment expressed as a percentage of the amount invested.
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Liquidity Attribute
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The ability to sell an asset within a reasonable time, at the current market value and for reasonable transaction costs.
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Time-pattern of cash flows attribute
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When the specified or expected cash flows related to a financial asset are to be received by an investor.
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Portfolio Structuring
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A combination of assets and liabilities; each asset and liability comprising desired attributes of return, risk, liquidity and timing of cash flows.
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Monetary Policy
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Briefly, actions of the central bank that influence the level of interest rate in order to achieve certain economic performance outcomes.
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Equity
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The sum of the financial interest an investor has in asset; an ownership position.
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Ordinary Shares
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A form of Equity that gives limited ownership rights in a corporation.
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Dividend
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The amount of a corporation's after-tax earnings distributed to shareholders.
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Hybrid Security
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A financial instrument that incorporates the characteristics of both debt and equity; for example a preference share or a convertible note.
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Liquidation
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The winding-up of a company through the sale of its assets and the payments of liabilities.
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Debt Instruments
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Represents the contractual conditions of a loan that must be repaid, including the issuer/borrower, amount, cost, timing of cash flows and maturity date.
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Secured Debt
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A situation where a lender has a claim over specified assets of the borrower, or a third party, in the event that the borrower defaults on loan payments.
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Negotiable Debt Instrument
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A debt instrument that can be sold by original lender and traded in the financial markets.
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Derivative Instrument
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A synthetic security that derives its pricing from a physical market commodity or security, and its used primarily to manage a price risk exposure
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Futures Contract
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An agreement to trade a specific commodity or financial asset of a specified quantity and quality, at a pre-determined price, at a specified future date.
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Forward Contract
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An over-the-counter contract negotiated with a bank that locks in a price today that will be applied at a specified future date, Includes a forward rate agreement and a forward foreign exchange contract.
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