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Definition
medium of exchange
-recon by others
store of value
-holds value
unit of account
-price in dollars |
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who controls money supply in US |
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Definition
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Money contributes to economic efficiency |
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Definition
because without it we would be a bartar system
In a barter system, if I want potatoes, and have oranges to trade, the person with the potatoes has to want oranges to be willing to trade with me. (I could be stuck with my oranges). With the use of money, I can give him a known amount of value in money, which he can buy what he wants to with.
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Term
terminology's of inflation and deflation |
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Definition
hyperinflation- very rapid increases in price level
inflation- increasing price level
disinflation- slowdown in infl. rate 5% to 3%
deflation- price decline
real prices vs. nominal prices- real prices are adjusted to inflation
ceteris paribus- other things being equal |
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Term
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Definition
-gold, copper, silver argicultural items
- control, supply of gold
[image] |
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Definition
-paper
-set by gov. reg
-control; faith on god
[image] |
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Term
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Definition
assets =liabilities + capital (equity)
assets = cash vaults, reserve at fed, bond, loans, properties & buildings
liab +stock holders= deposits and other bank borrowings, bank capital
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Term
Classify a deposits as a liability
Assets? |
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Definition
Cd's
cash, loans, securites |
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Term
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Definition
-what you or your company is worth
what you own - what you owe
(assets - liabilities)
captial- money |
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Term
Fischer's Quantity Theory |
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Definition
2. equation of exchange MV=PT
m =amount of money
v= velocity or circulation of money
P= price level
T= amount of real trade transactions
3. variation of QT
%ΔM + %ΔV = %ΔP + %ΔQ
M is amount of money, V is velocity or circulation of money, P is the price level, and T is the amount of real trade transactions (replaced with Q to give us P*Q = GDP).
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Term
Velocity of Money (turnover of money) |
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Definition
GDP/M=V or PT/M=V
a ratio of nominal gdp to a measure of the money supply
turnover- the # of times one dollar is used to purchase final goods and services included in GDP |
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Term
Primary and Secondary Market |
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Definition
primary- investment banks underwriting fees on IPO
- public offerings attracted by investment banks
-stocks and bonds
-corp raises funds through new issues of securites
secondary- NYSE;NASDAQ; NY bond exchange
-sale through investors
-markets that trade financial instruments once they are issued
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Term
what kind of bond doesnt pay interest zero coupon bonds? |
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Definition
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Stock ownership represents ownership |
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Definition
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Term
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Definition
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Term
Fischers effect Nominal rate vs. real rate |
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Definition
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Term
calculate bond of 1000 6% yeild dollar coupon to you equals |
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Definition
(interest rate/what you pay)*par value=current yield
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Term
most frequent analysis is yield to majority |
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Definition
The rate of return anticipated on a bond if it is held until the maturity date. YTM is considered a long-term bond yield[image] expressed as an annual rate. The calculation of YTM takes into account the current market price, par value, coupon interest rate and time to maturity. It is also assumed that all coupons are reinvested at the same rate. Sometimes this is simply referred to as "yield" for short. |
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Term
Inverse relationship bond prices of yeild |
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Definition
Coupon / interest rate = Bond Price
Positive and neg yield curve:
Business Cycle and the Shape of Yield Curve
Stage 1 –recession: upsloping yield curve
Stage 2 –expansion: flat or inverting yield curve
Stage 3 –cycle peak: downsloping yield curve
Stage 4 –slowing economy: humped yield curve
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Term
future value of money is $1 today is worth more than a dollar tom. unless you deflation |
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Definition
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Term
Loanable funds theory (Saunders) |
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Definition
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Term
fundamental analysis and technical analysis |
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Term
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Definition
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Who was the Gold standard locking prices down: -Bretton Woods fixed exchange rates to dollar with dollar being convertible into gold; ended 1968/1971 by Nixon;
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What dividends are: periodic payments out of earnings |
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Definition
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Term
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Definition
An investment-grade security backed by a pool of bonds, loans and other assets[image]. CDOs do not specialize in one type of debt but are often non-mortgage loans or bonds. |
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