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40 Cards in this Set
- Front
- Back
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Common stock |
ownership shares in a firm |
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voting rights |
common stock: preferred stock: |
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claimants |
when company goes belly-up, people waiting because they are owed money |
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limited liability |
the provision that even if a company fails completely,the max amount that shareholders lose is their initial investment
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price weighted |
index based on average price of collection ofindividual stocks. Price-weighted averages give greater weight to shares withhigher pricesn
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value-weighted |
index based on value of the firms, Like the S&P 500.Value-weighted indexes give greater weight to larger firms |
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DIJA |
Dow Jones Industrial Average: best-known index of stock market performance, itmeasures average price of single share in 30 very large and well-known Americancompanies |
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S&P 500 |
Standard Poor's 500 Index: stock-market index that is based on the value of 500of the largest firms in the U.S. economy |
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Nasdaq |
value-weighted index of more than 5,000 companiestraded on the over-the-counter market through the National Association of SecuritiesDealers Automatic Quotation Serve; the index is composed mainly of smaller,newer firms and in recent years has been dominated by technology and Internet companies |
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Wilshire 5,000 |
most broadly based value-weighted stock index in use.Covers roughly 6,500 publicly traded stocks in U.S.
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Derivatives |
financial instrument, such as a futures contract or anoption, whose value and payoff are “derived from” the behavior of an underlyingasset
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Underlying asset value |
financial instrument used by savers/lenders totransfer resources directly to investors/borrowers
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Risk free rate of return |
the rate ofreturn on an investment whose future value is known with certainty
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Federal Reserve System |
central bank responsible for monetary policy in U.S. |
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Securities and Exchange Commission |
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Forward contracts |
agreement to exchange an asset for money in future ata currently agreed-upon price |
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Futures contracts |
standardized agreement specifying the delivery of anunderlying asset (commodity or financial instrument) at a given future date fora currently agreed-upon price
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Short position |
position held by seller of futures contract |
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Long position |
position held by buyer in futures contract |
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Settlement date |
the predetermined day that the agreed upon payment or delivery is to be made |
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Clearing corporation |
institutionthat acts as counterparty to both sides of all futures market transactions,guaranteeing that the parties to the contract will meet their obligations
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marking to market |
accounting rule in which financial instrument isrepriced and funds transferred from the loser to the winner at the end of everyday
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Nominal exchange rate |
value of one unit of a country’s currency in terms ofanother country’s currency
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Real exchange rate |
exchange rate at which one can exchange goods andservices from one country for goods and services from another country
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Depreciation of currency |
decrease in the value of a country’s currency relativeto the value of another country’s currencybody
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Appreciation of currency |
increase inthe value of a country’s currency relative to the value of another country’scurrency
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Spot rate |
today’s price in market or market price paid forimmediate delivery of a commodity or financial instrument
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Financial intermediation |
when financial institutions intermediate between savers and borrowers |
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Bank bond holdings |
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Risk diversification |
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Bank capital |
bank assets minus bank liabilities. Net worth of bank |
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Commercial banks
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financial intermediaries that provide banking servicesto businesses and households, allowing them to deposit funds safely and borrowthem when necessary
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Commercial bank assets |
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Savings vs. checking deposits |
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U.S. T-bills |
most straight-forward bond, represents a promise by U.S. government to pay 100% on fixed future date |
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Bank reserves |
Amount of "cash" banks are federally required to keep on hand |
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Unit banks |
banks that do not have branches |
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Charters - state vs. federal |
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Dual banking system |
system in U.S. in which banks supervised by federalgovernment and state government authorities coexist
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Glass-Steagall |
Prohibited commercial banks from participating in investment banking |
