CAPITAL MARKETS Flashcards

1
Q

CMIP -

A

Capital Market Institute of the Philippines

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2
Q

GSEDs -

A

Government Securities Eligible Dealers

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3
Q

PDIC -

A

Philippine Deposit Insurance Corporation

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4
Q

MMMFs -

A

Money Market Mutual Funds

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5
Q

NAV -

A

Net Asset Value (NAV)

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6
Q

PSE -

A

Philippine Stock Exchange

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7
Q

MSE -

A

Manila Stock Exchange

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8
Q

MKSE -

A

Makati Stock Exchange

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9
Q

SRO -

A

Self-regulatory Organization

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10
Q

IPO -

A

Initial Public Offering

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11
Q

IMM -

A

Inetrnational Monetary Market

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12
Q

CME -

A

Chicago Mercantile Exchange

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13
Q

LIBOR -

A

London Interbank Offered Rate

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14
Q

CPI -

A

Consumer Price Index

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15
Q

ADAPS -

A

Automated Debt Auction Processing System

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16
Q

BIS -

A

Bridge Information Systems

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17
Q

Phisix -

A

Philippine Stock Index

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18
Q

NHMFC -

A

National Home Mortgage Finance Corporation

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19
Q

PSA -

A

Philippine Statistic Authority

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20
Q

PDCI -

A

Philippine Deposit Insurance Corporation

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21
Q

DBP -

A

Development Bank of the Philippines

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22
Q

PNB -

A

Philippine National Bank

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23
Q

GSIS -

A

Government Service Insurance System

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24
Q

SSS -

A

Social Security System

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25
Q

WOCCU -

A

World Council of Credit Union

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26
Q

PIFA -

A

The Philippine Investment Funds Association

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27
Q

CPPI -

A

The Chamber of Pawnbrokers of the Philippines, Inc.

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28
Q

was formed from the country’s two exchange stock exchanges.

A

PSE

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29
Q
  • established on aug. 8 1927
A

MSE

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30
Q
  • established on may 27, 1963
A

MKSE

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31
Q
  • granted PSE a self-regulatory organization
A

JUNE 1998

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32
Q
  • are structure through which funds flow.
A

FINANCIAL MARKETS

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33
Q

facilitate transactions in all types of financial claim

A

FINANCIAL MARKETS

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34
Q

entitles a credit to receive payment from a debtor in circumstances specified in a contract between them.

A

FINANCIAL CLAIM

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35
Q

have financial claims on banks where they hold their deposits.

A

DEPOSITOR

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35
Q
  • are at the heart of financial system
A

FINANCIAL MARKET

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36
Q

entitles a credit to receive payment from a debtor in circumstances specified in a contract between them.

A

FINANCIAL CLAIM

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37
Q

have financial claims on banks where they hold their deposits.

A

DEPOSITOR -

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38
Q
  • are at the heart of financial system
A

FINANCIAL MARKET -

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39
Q

CLASSIFICATION OF FINANCIAL MARKET

A
  1. Primary and Secondary Market
  2. Money or Capital Market
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40
Q

financial claims are initially sold by deficit units in primary markets.

A

PRIMARY MARKETS -

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41
Q
  • users of funds raise funds, through new issues of financial instruments such as stocks and bonds.
A

PRIMARY MARKETS -

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42
Q

consist of underwriters, issuers, and instruments involved in buying and selling original or new issues of securities.

A

PRIMARY SECURITIES -

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43
Q
  • also called merchant banks.
A

INVESTMENT BANKS

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44
Q

most primary market transactions are done.

A

INVESTMENT BANKS

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45
Q

guarantees the sale of the issues, but does not intend to hold the shares or bonds in his own account.

A

UNDERWRITER -

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46
Q

first-time issues for the public

A

INITIAL PUBLIC OFFERING -

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46
Q

INVESTMENT BANKS PROVIDE THE FOLLOWING SERVICES

A
  1. Provide funds in advance
  2. Give advice to issuing corporations
  3. Attract the initial public purchasers of the securities
  4. Act as a market analyst and advisor to the issuing company
  5. Absorb the risk and cost of creating a market for securities.
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47
Q

once financial instruments are issued in primary markets, they are then traded in secondary markets

A

SECONDARY MARKETS

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47
Q

form that the primary market sale can take

A

PRIVATE PLACEMENT -

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48
Q
  • are likes used car markets
A

SECONDARY MARKETS

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49
Q

markets for currently outstanding securities. Previously bought and owned and now being resold.

A

SECONDARY SECURITIES -

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50
Q

shares held by the public.

A

OUTSTANDING SHARES/SECURITIES -

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50
Q
  • exist for the purpose of marketability or easy selling/transfer of ownership.
A

SECONDARY MARKET

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51
Q

classified in the balance sheet as cash equivalents.

A

MARKETABLE SECURITIES -

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51
Q
  • financial institutions organized usually as a corporation or a partnership.
A

SECURITIES DEALER

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52
Q

buy securities as their assets and resell them.

A

SECURITIES DEALER

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53
Q
  • do nont buy their own account.
A

SECURITIES BROKERS

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53
Q

earnings are mere commissions.

A

SECURITIES BROKERS

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54
Q
  • cover markets for short-term debt instruments, usually issued by companies with high credit standing.
A

MONEY MARKETS

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54
Q

find the purchashers for the securities that others wish to sell.

A

SECURITIES BROKERS

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54
Q
  • generally have short maturities are highly liquid and have low default risk.
A

MONEY MARKET INSTRUMENTS

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55
Q
  • are the core of money market transactions
A

DEALERS AND BROKERS

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56
Q

-banks with temporary cash surpluses led commercial banks to set up the money market as auction house for excess reserves.

A

INTERBANK CALL MARKET

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56
Q
  • treated as deposit substitutes.
A

INTERBANK CALL LOANS

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56
Q
  • are credits of one bank to another for a period not exceeding 4 days.
A

INTERBANK CALL LOANS

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56
Q

alternative ways of getting money from the public other than traditional bank deposits.

A

DEPOSIT SUBSTITUTES -

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57
Q
  • IMM was opened and CME pioneering the trading of international financial derivatives most notably.
A

MAY 1972

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58
Q

payment process both in the primary and secondary markets for GS traded.

A

SETTLEMNT OF TRADES -

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58
Q

value based on 100 points per unit.

A

PRICE OF A GS -

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58
Q

market in which these Eurodollar deposits are traded.

A

EURODOLLAR MARKET -

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58
Q
  • non-formally organized market are another mode of originating GS fro specific investors.
A

OVER-THE-COUNTER (OTC)

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58
Q
  • the rate at which the central bank of country lends money to commercial banks in the event of any shortfall of funds.
A

REPO RATE

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58
Q
  • known as the London Interbank Offered Rate.
A

EURODOLLAR FUNDS

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58
Q

are US-dollar-denominated CDs in foreign banks,

A

EURODOLLAR CERTIFICATES OF DEPOSITS -

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58
Q

the official registry of absolute ownership, legal, or beneficial titles.

A

RoSS -

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58
Q

the increment or interest on an investment in GS.

A

YIELD -

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58
Q

tender to buy a specified amount of GS by GSED in the primary auction of GS.

A

NON-COMPETITIVE BID -

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58
Q

tender to buy an amount of GS at an indicated yield rate per anumm.

A

COMPETITIVE BID -

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58
Q

method in which successful competitive bidders pay the price they have bid.

A

PRICE DISCRIMINATION OR ENGLISH AUCTION -

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59
Q

method of pegging a uniform coupon rate of T-bond at the stop-out level.

A

UNIFORM PRICE OR DUTCH AUCTION -

60
Q
  • allow participants to undertake rapid refinancing in the interbank market.
A

REPO MARKET

61
Q

sale of securities for cash with a commitment to repurchase them at a specified price at a future date.

A

REPURCHASE AGREEMENT -

61
Q

are government securities which mature in less tha a year.

A

T-BILLS

62
Q
  • are government securities which mature beyond one year.
A

T-BONDS

62
Q

is an electronic mode by which the national government sells government securities to a network of GSED.

A

ADAPS -

63
Q

used to produce goods and services to generate revenues.

A

CAPITAL GOODS -

64
Q
  • markets for long-term securities.
A

CAPITAL MARKETS

64
Q
  • composed of stock market fro equity or stock securities.
A

CAPITAL MARKETS

65
Q

THE CAPITAL MARKET CONSIST OF:

A
  1. Securities market; and
  2. Negotiated(or non-securities) market.
65
Q
  • companies issue common stock or bonds, which are marketable/negotiable, to obtain long-term funds.
A

SECURITIES MARKET

65
Q
  • the stock price for the first transaction at the start of trading day
A

OPEN

65
Q

SECURITIES MARKET IS COMPOSED OF:

A
  1. Stock market for equity or stock securities;
  2. Bond market fro debt securities; and
  3. Derivate securities market for securities their value from another security
65
Q
  • the lowest stock price for transaction during the day
A

LOW

65
Q

serves as the medium or agent of exchange transaction dealing with equity securities.

A

STOCK MARKET -

65
Q
  • a measure of the price level of the shares listed in the exchange by the indicated category.
A

STOCK INDEX

66
Q
  • the highest stock price for transaction during the day
A

HIGH

67
Q
  • the stock price for the last transaction of the day
A

CLOSE

67
Q

relationship between the benefits and the cost of the stock.

A

VALUE OF THE STOCK -

67
Q
  • is the ratio of stock price to earnings per share.
A

PRICE-EARNIGS (PE) RATIO

67
Q
  • market wheere bonds are issued and traded.
A

BOND MARKET

68
Q

CLASSIFICATION OF BOND MARKET

A
  1. Treasury notes and bonds market;
  2. Municipal bonds market; and
  3. Corporate bonds market
68
Q
  • issued by the government’s treasury. Backed by the full faith and credit of government and are therefore free from risk.
A

TREASURY NOTES AND BONDS

68
Q
  • important financial instrument for development.
A

MUNICIPAL BOND (LGU)

68
Q
  • long term bonds issued by private corporation.
A

CORPORATE BONDS

69
Q
A
69
Q
  • legal contract that specified the rights and obligation of bond issuer and bondholders.
A

BOND INDENTURE

69
Q

commonly used to describe a type of security which market value is directly related to or derived from another traded security.

A

DERIVATE -

69
Q
  • refers to the amrket where derivative securities are traded.
A

DERIVATIVE SECURITIES MARKET

69
Q
  • financial instruments which payoffs are linked to another, previously issued securities.
A

DERIVATIVE SECURITIES

70
Q
  • allow a farmer to keep his product until some time in the future.
A

FUTURE CONTRACTS

70
Q
  • does not involve securities, thus called non-securities market.
  • results from negotiation between a borrower and a lender.
A

NEGOTIATED/NON-SECURITIES MARKET

71
Q
  • a company or a person from lending institution, like a bank.
A

DIRECT LOAN

72
Q
  • someone asks from a parent or a relative is a negotiated loan occurring in a negotiated market.
A

PERSONAL LOAN

72
Q
  • buyer and seller deal with each other, either directly or indirectly through broker or dealer.
A

NEGOTIATED MARKET

72
Q
  • can be obtained from a group of banks called a syndicate.
A

SYNDICATED LOAN

72
Q

THE NEGOTIATED OR NON-SECURITIES MARKET INCLUDES, BUT IS NOT LIMITED TO, THE FOLLOWING:

A
  1. Loan market
  2. Mortgage market
  3. Lease MArket
73
Q
  • where a one-on-one transaction takes place between a borrower and a lender.
A

LOAN MARKET

74
Q
  • where a real property like land, building,and big machineries, among other are used to guarantee or secure big loans.
A

MORTGAGE MARKET

74
Q
  • where equipment, building, or other property is being leased/rented out to another party.
A

LEASE MARKET

74
Q
  • owns the property and who is renting the property out
A

LESSOR

74
Q
  • involves parties and transactions related to loans grabted to households who desire to buy properties.
A
  1. CONSUMER CREDIT MARKET
75
Q
  • usually takes the form of character loan, car loan, appliance loan, educational loan, and amomng others.CONSUMER CREDIT - usually takes the form of character loan, car loan, appliance loan, educational loan, and amomng others.
A

CONSUMER CREDIT

75
Q
  • are the exchanges. Exchanges, whether stock markets or derivatives exchanges,started as physical places where trading took place.
A
  1. ORGANIZED MARKET
76
Q
  • less formal. Although often well-organized networks of trading relationships centered on one or more dealers.
A
  1. OVER-THE-COUNTER (OTC) MARKET
77
Q
  • where the trading is done by an independent third party matching on orders received to buy and sell a particular security.
A
  1. AUCTION MARKET
77
Q
  • buds and offers stipulate both prices and volume and are handled by the third party.
A

TRADER

77
Q
  • provides the physical and institutional structure through which the money of one country is exchanged for that of another country.
A
  1. FOREIGN EXCHANGE MARKETS
77
Q
  • agreement between a buyer and seller that given amount of one currency is to be delivered at a specified rate for some other currency
A

FOREIGN EXCHANGE TRANSACTION

77
Q

FOREIGN EXCHANGE MARKET CONSIST OF TWO TIERS

A
  1. Interbank or wholesale market
  2. Client or retail market
77
Q
  • buying and selling is done “on the spot: that is , for immediate delivery and payment.
A
  1. SPOT MARKET
77
Q
  • contracts are originated and traded that give the holder right to buy something in the future at a price specified in the contract.
A
  1. FUTURE MARKET
77
Q
  • contract’s price is adjusted each day as the price of the asset underlying futures contract changes and as the contract approached expiration.
A

FUTURE’S CONTRACT

77
Q
  • establish anticipation of a price change
A

SPECULATORS

77
Q
  • employ futures to reduce the risk from price changes.
A

HEDGER

77
Q
  • hedgers pass the risk to speculators.
A

HEDGING

77
Q
  • profits from betting on the direction where an asset will be moving.
A

SPECULATION

78
Q
  • consist of circular steps leading down to the center of the pit.
A

TRADING PIT

78
Q
  • position traders, day traders, or scalpers who are specialists on the stock exchanges where they trade for their own account.
A

PROFESSIONAL TRADERS

78
Q
  • position in the future market based on their expectation about the future direction of prices of underlying assets.
A

POSITION TRADERS

78
Q
  • position within a day and liquidate it before the day’s end.
A

DAY TRADERS

79
Q
  • positions for very short period of time, sometimes only minutes,in attempt to profit from this active trading.
A

SCALPERS

80
Q
  • dealers purchase securities outright, take title to them.
A

LONG POSITION

81
Q
  • the sale of borrowed security, commodity, or currency, with the expectation that the asset will fall in value.
A

SHORT POSITION

82
Q
  • involve trading contracts calling the future delivery of financial instruments.
    -involve non-standarized underlying assets
A
  1. FORWARD MARKET
82
Q
  • break up every trade into a buy and sell transaction and take the opposite side of the transaction.
A

CLEARING HOUSES

82
Q

AN OPTION CONTRACT IS DEFINED BY THE FOLLOWING ELEMENTS

A
  1. Type (Put or call)
  2. Underlying Security
  3. Unit of trade (number of shares)
  4. Strike price
  5. Expiration date
82
Q
  • where stocks option are traded.
A
  1. OPTION MARKET
82
Q
  • if they are issued by individuals
A

Calls

83
Q
  • are called warrants
A

Option

83
Q
  • all option of the same class that also have the same unit trade at the same strike price and expiration date.
A

OPTION SERIES

83
Q
  • gives the buyer the right t buy an underlying security or futures contract at a strike price.
A

CALL OPTION

83
Q
  • call option, must pay the writer an upfront fee.
A

CALL PREMUIM

84
Q
  • are agreements between two parties in exchanging specified periodic cash flows in the future.
A
  1. SWAP MARKET
84
Q

THERE ARE FIVE GENERAL TYPES OF SWAPS

A
  1. Interest rate Swaps
  2. Currency Swaps
  3. Credit Risk Swaps
  4. Commodity Swaps
  5. Equity Swaps
84
Q
  • ready to pay a higher price for an investment regardless of the risk involve.
A
  1. RISK-TAKER INVESTORS (BEARD AND PIGS).
84
Q
  • refers to transaction between broker-dealers and large institutions
A

THIRD MARKETS

84
Q
  • refers to transactions that take place between securities firms and large institutional investors.
A

FOUTH MARKET

84
Q
  • when faced with two investment alternatives with equal returns but one is riskier than the other.
A
  1. RISK-AVERSE INVESTORS (BULLS AND CHICKEN)
84
Q
  • technique used by people who try to profit from the falling price of a stock.
A

SHORT SELLING

84
Q
  • do not take into account the risks involved in the investment and who are focused only on the expected returns.
A
  1. RISK-NEUTRAL INVESTORS
84
Q
A
84
Q
  • bullish organization that stokes and develops in the investment character of Filipinos in the Philippine
A

CMIP

84
Q
  • with maturity of more than one year.
A

LONG-TEM

84
Q
  • belong to the money market
A

SHORT-TERM INSTRUMENTS

84
Q
  • belong to the capital market
A

LONG-TERM INSTRUMENTS

84
Q
  • are assets that will be converted to cash within a period of one year.
A

CURRENT ASSET

84
Q
  • maturity of one year or less
A

SHORT-TERM

84
Q
  • have lives longer than a year.
A

NON-CURRENT ASSETS

85
Q
  • are short-term securities
  • paper electronic evidences of debt dealt in the money markets.
  • issued by the government and corporations needing short-term funds.
A

MONEY MARKET INSTRUMENTS

86
Q
  • government issued securities with maturities of less than 91 days, specifically 35 days or 42 days.
A

CASH MANAGEMENT BILLS

86
Q
  • issued by the bureau of the treasury with 91 day, 182-day and 364-day maturities.
  • short term, are zero coupon securities
A

TREASURY BILLS (T-BILLS)

86
Q
  • long term, are sold only through government securities eligible dealers
A

T-BONDS

86
Q
  • difference between their purchase price and their face value.
A

DISCOUNT YIELD OR MARGIN

86
Q
  • is a time draft issued by a bank payable to a seller of goods.
A

BANKER’S ACCEPTANCE

86
Q
  • issued by a bank is an order for the bank to pay a specified amount to the bearer of the time draft on a given date.
A

TIME DRAFT

86
Q
  • the buyer has its bank issue a letter of credit on its behalf in favor of the seller.
A

LETTERS OF CREDIT

86
Q
  • international letter of credit is opened
A

IMPORTS

86
Q
  • a domestic letter of credit is opened
A

LOCAL PURCHASE

87
Q
  • a contractual agreement between a bank,
A

COMMERCIAL LETTER OF CREDIT

87
Q

is a receipt issued by a commercial bank for the deposit of money.
- bank-issued time deposit that specifies an interest rate and maturity date and is negotiable.

A

NEGOTIABLE CERTIFICATES OF DEPOSIT -

88
Q
  • are legal contracts that involve the actual sale of securities by a borrower to a lender with a commitment to repurchase the securities at the contract price plus a stated interest charge at a later date.
A

REPURCHASE AGREEMENTS

89
Q
  • is an agreement involving the purchase of securities by one party to another with the promise to sell them back at a given date in the future.
A

REVERSE REPURCHASE AGREEMENT OR REVERSE REPO

90
Q

insured deposit accounts that are usually managed by banks or brokerages and can be convenient place to store money.

A

MONEY MARKET DEPOSIT ACCOUNTS - PDIC-

91
Q
  • very safe and highly liquid investments, typically paying higher interest than regular savings account.
A

MONEY MARKET ACCOUNTS

92
Q
  • are investment funds that pool funds from numerous investors and invest in money market instruments.
A

MONEY MARKET MUTUAL FUNDS

93
Q
  • is an investment company that pools the funds of many individuals and institutional investors.
A

MUTUAL FUNDS

94
Q
  1. invest primarily in shared of stock.
A

STOCK FUNDS/EQUITY FUNDS -

95
Q
    • invest both in shares of stock and debt instruments
A

BALANCED FUNDS

96
Q
    • invest in long term debt instruments of governments or corporations.
A

BOND FUNDS

97
Q
    • invest purely in short term debt instruments.
A

MONEY MARKET FUNDS

98
Q
    • invest in assets that are expected to reap large capital gains
A

GROWTH FUNDS

99
Q
A
99
Q
    • invest in stocks that regularly pay dividends and in noted and bonds that regularly pay interest
A

INCOME FUNDS

99
Q
A
99
Q
A
99
Q
A
100
Q
A
101
Q
A
102
Q
A