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Chapter 2 finance
Fundamental concepts in financial management
Question | Answer |
---|---|
the markets in which assets are bought or sold for "on-the-spot" delivery. | Spot market |
the markets in which participants agree today to buy or sell an asset at some future date. | futures markets |
the financial markets in which funds are borrowed or loaned for short periods. | money markets |
the financial markets for stocks and for intermediate- or long-term debt | capital markets |
markets in which corporations raise capital by issuing new securities | primary markets |
markets in which securities and other financial assets are traded among investors after they have been issued by corporations. | secondary markets |
markets in which transactions are worked out directly between two parties. | private markets |
markets in which standardized contracts are traded on organized exchanges | public markets |
any financial asset whose value is derived from the value of some "underlying" asset | derivative |
an organization that underwrites and distributes new investment securities and helps businesses obtain financing. | investment bank |
the traditional department store of finance serving a variety of savers and borrowers. | commercial bank |
a firm that offers a wide range of financial services, including investment banking, brokerage operations, insurance, and commercial banking. | financial services corporation |
organizations that pool investor funds to purchase financial instruments and thus reduce risks through diversification | mutual funds |
mutual funds that invest in short-term, low-risk securities and allow investors to write checks against their accounts. | money market funds |
formal organizations having tangible physical locations that conduct auction markets in designated securities | physical location exchanges |
a large collection of brokers and dealers, connected electronically by telephones and computers, that provides for trading in unlisted securities | over-the-counter (OTC) market |
includes all facilities that are needed to conduct security transactions not conducted on the physical location | dealer market |
a corporation that is owned by a relatively large number of individuals, who are not actively involved in the firm's management | publicly owned corporation |
the act of selling stock to the public at large by closely held corporation or its principal stockholders | going public |
the market for stock of companies that are in the process of going public | initial public offering (IPO) market |