Money & Banking Chapter 5

30 cards

Vocabulary and key concepts from chapter 5

Created Sep 28, 2011
by cddobbins

Shuffle Cards

Table View

Download

Flashcard Set Preview

	Side A	Side B
1	Decisions by individuals or institutions about what assets to hold	Asset allocation
2	Company whose primary purpose is to hold securities, trade them, or help others trade them;...	Securities firm
3	Variant of a mutual fund that raises money from wealthy people and institutions and is largely...	Hedge fund
4	Borrowing money to purchase assets that magnifies gains and losses	Leverage
5	Firm that buys and sells securities for others	Broker
6	Firm that buys and sells certain securities for itself, making a market in the securities	Dealer
7	Financial institution that serves as an underwriter and advises companies on mergers and acquisitions	Investment bank
8	Financial institution that helps companies issue new securities	Underwriter
9	Financial markets in which firms and governments issue now securities	Primary markets
10	Financial markets in which existing securities are traded	Secondary markets
11	Firm that issues securities that are traded in financial markets	Public company
12	Sale of stock when a firm becomes public	Initial public offering (IPO)
13	An average prices for a group of stocks	Stock market index
14	Mix of stocks and bonds that a firm issues	Capital structure
15	Proposition that a firm's capital structure doesn't matter	Modigliani-Miller Theorem (MM Theorem)
16	The price of every stock equals the value of stock, so no stock is a better buy than any other	Efficient-markets hypothesis
17	Asset with a price below the present value of expected earnings	Undervalued asset
18	The movements of a variable whose changes are unpredictable	Random walk
19	Mutual fund that picks stocks based on analysts' research	Actively managed fund
20	Mutual fund that buys all the stocks in a broad market index	Index fund
21	Field that uses ideas from psychology to study how deviations from rational behavior affect...	Behavioral finance
22	Securities with payoffs tied to the prices of other assets	Derivatives
23	Agreement to trade an asset for a certain price at a future point in time	Futures contract
24	The right to trade a security at a certain price any time before an expiration date	Option
25	An option to buy a security	Call option
26	An option to sell a security	Put option
27	Reducing risk by purchasing an asset that is likely to produce a high return if another of...	Hedging
28	Using financial markets to make bets on asset prices	Speculation
29	Producing new capital	Investment
30	A fund that sells shares to savers and buys a diversified set of securities, reducing risk...	Mutual fund