8.2 Financial markets Flashcards Preview

Interpreting Financial & Accounting Information > 8.2 Financial markets > Flashcards

Flashcards in 8.2 Financial markets Deck (15)
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1
Q

What is a financial market?

A

A marketplace where financial wealth or assets (such as equities, bonds, currencies and derivatives) are traded.

2
Q

What are stocks?

A

The overall ownership in one or more companies. (as opposed to shares which are certificates of ownership in a particular company).

3
Q

What is an investor?

A

A person or entity who invests of commits capital into an entity with the expectation of financial returns.

4
Q

What is a lender?

A

A person, group or financial institution that lends money with the expectation of return with interest.

5
Q

What is a borrower?

A

A person or entity who obtains funds for a specified period on the promise of repayment.

6
Q

What is a bank?

A

A financial institution licenced to receive deposits and make loans.

7
Q

What is a financial regulator?

A

An institution that supervises and controls a financial system to protect the interest of investors and to guarantee fair and efficient markets. e.g. LSE

8
Q

What is an intermediary?

A

A service provider in the market who facilitates connections between investors and fund users.

9
Q

What is a capital market?

A

A market where long-term finances with maturities greater than one year are traded.

10
Q

What is a primary market?

A

A new issues market where companies can raise new funds by issuing shares of loans stock.

11
Q

What is a secondary market?

A

A market facilitating the dealing and trading of already-issued securities.

12
Q

What is a money market?

A

A market where instruments with high liquidity and very short maturity (less than one year) are traded.

13
Q

What are treasury bills(“T-Bills”)?

A

Short-term debt instruments issued and backed by the government.

14
Q

What is a commercial paper?

A

A short-term unsecured debt instrument issued and backed by an issuing company or bank.

15
Q

Market trading is usually done “over the counter” (OTC). What does this mean?

A

A decentralized market where assets are traded through private securities dealers (rather than through a formal exchange).

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