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26 Cards in this Set
- Front
- Back
FINANCIAL SYSTEM
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Process by which money flows from savers to users.
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MAKES UP THE FINANCIAL SYSTEM
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Savers
Users Financial Institutions Financial Markets |
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SECURITIES
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Financial instruments that serve as obligations of the part of the issuer to provide purchasers with expected or stated returns on the funds invested or loaned.
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MONEY MARKET INSTRUMENTS
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Short-term debt securities issues by governments, financial institutions, and corporation; investor are paid interest for use of their funds.
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GOVERNMENT BONDS
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Sold by the US Department of Treasury
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MUNICIPAL BONDS
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Bonds issued by state or local government; revenue bonds are used toward a project that will produce revenue, general obligation bonds are not.
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CORPORATE BONDS
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A diverse group and often vary based on the collateral.
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BONDHOLDERS
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Creditors of a corpooration; selling bonds allows for long term debt capital.
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COMMON STOCK
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Basic form of corporate ownership; vote on major company decisions, such as purchasing another company; expect cash dividend payments, price appreciation, or both.
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PREFERRED STOCK
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Recieve preference in the payment of dividends.
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CONVERTIBLE SECURITIES
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Stockholders given the right to exhange the bond or preferred stock for a fixed share of common stock
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FINANCIAL MARKETS
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Securities are issued and traded.
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PRIMARY MARKET
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Firms an governments issue securities and sell them initially to the public.
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SECONDARY MARKET
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Collection of financial markets in which previously issued securities are traded among investors.
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STOCK MARKETS
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Market in which shares are bought and sold by investors, such as the New York Stock Exchange.
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COMMERCIAL BANKS
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The largest and most important financial institution in the United States; 6800 in US; assets of $12 trillion
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FDIC
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Enacted by Banking Act of 1933; restored public confidence in the banking system; up to $250,000; runs were common before FDIC.
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M1
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Currency in circulation and balances in bank checking accounts.
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M2
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M1 + balances in some savings accounts and money market mutual funds
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INSIDER TRADING
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Use of material nonpublic information about a company to make investment profits.
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FED
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Central bank of the United States
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FINANCIAL INSTITUTIONS
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Intermediary between savers and borrower, collecting funds from savers and then lending the funds to individuals, businesses, and governments.
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NET WORTH
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Differene between what you own and what you owe.
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REVENUE BOND
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A bond issue whose proceeds will be used to pay for a project that will produce profits, like a toll road or bridge.
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GENERAL OBLIGATION BOND
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Bond whose proceeds are used to pay for profits that will not produce any revenue.
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PENSION
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Provide retirement benefits to workers and their familys; funded by regular contributions made by employers and employees. Pension funds have over 4.6 trillion dollars in assets.
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