Chapter 17 Flashcards Preview

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Flashcards in Chapter 17 Deck (41):
1

money

anything that is acceptable as payment for goods and services

2

currency

bank notes and coins used as a medium of exchange

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demand deposits

money kept in chequing accounts that can be withdrawn by depositors on demand

4

time deposits

money invested for a specific period of time

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term deposits

deposits at a bank or other financial institution that pay interest but cannot be withdrawn on demand

6

open market operations

the purchase or sale of Canadian government securities by the Bank of Canada to stimulate or slow down the economy

7

bank rate

the interest rate that the Bank of Canada charges on one-day loans to financial institutions

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target for the overnight rate

the signal to the major participants in the money market as to what the Bank of Canada is aiming for when participants borrow and lend one-day funds to each other

9

four pillars of the Canadian financial system

the four pillars of the Canadian financial system refers to banks, trust companies, insurance companies, and investment dealers

10

financial intermediation

the process in which financial institutions act as intermediaries between the suppliers and demanders of funds

11

chartered banks

profit-oriented financial institutions that accept deposits, make business and consumer loans, invest in government and corporate securities, and provide other financial services

12

trust company

a financial institution that conducts the same activities as a bank but can also administer estates, trusts, pension plans, and agency contracts

13

credit unions and caisses populaires

not-for-profit, member-owned financial cooperatives

14

pension funds

large pools of money set aside by corporations, unions, and governments for later using in paying retirement benefits to their employees or members

15

Canada Deposit Insurance Corporation (CDIC)

the Canada Deposit Insurance Corporation (CDIC) is a federal Crown Corporation created in 1967 to provide deposit insurance and contribute to the stability of Canada's financial system

16

securities

investment certificates issued by corporations or governments that represent either equity or debt

17

bonds

securities that represent a long-term debt obligation (liabilities) issued by corporations or governments

18

interest (coupon rate)

a fixed amount of money paid by the issuer of a bond to the bondholder on a regular schedule, typically every six months; stated as the coupon rate

19

principal (par value)

the amount borrowed by the issuer of a bond; also called the par value

20

high-yield (junk) bonds

high-risk, high-return bonds

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secured bonds

corporate bonds for which specific assets have been pledged as collateral

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mortgage bonds

corporate bonds that are secured by property, such as land, equipment, or buildings

23

debentures

unsecured bonds that are backed only by the reputation of the issuer and its promise to pay the principal and interest when due

24

convertible bonds

corporate bonds that are issues with an option that allows the bondholder to convert them into common shares

25

bond ratings

letter grades assigned to bond issues to indicate their quality, or level of risk; assigned by rating agencies such as Moody's and Standard & Poor's (S&P)

26

mutual fund

a financial service company that pools its investors' funds to buy a selection of securities that meet its stated investment goals

27

exchange-traded fund (ETF)

a basket of marketable securities in a category, such as an industry sector, an investment objective, or a geographical area, or that track an index. ETFs are similar to mutual funds but trade like shares

28

futures contracts

legally binding obligations to buy or sell specified quantities of commodities or financial instruments at an agreed-on price at a future date

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options

contracts that entitle holders to buy or sell specified quantities of common shares or other financial instruments at a set price during a specified time

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institutional investors

investment professionals who are paid to manage other peoples' money

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investment bankers

companies that act as intermediaries, buying securities from corporations and governments and reselling them to the public

32

underwriting

the process of buying securities from corporations and governments and reselling them to the public with the aim of reselling them at a higher price; the main activity of investment bankers

33

stockbroker

a person who is licensed to buy and sell securities on behalf of clients

34

primary market

the securities market where new securities are sold to the public, usually with the help of investment bankers

35

secondary market

the securities market where old (already issued) securities are bought and sold, or traded, among investors

36

broker markets or organized stock exchanges

organizations on whose premises securities are resold by using an auction-style trading system

37

dealer markets

securities markets where buy and sell orders are executed through dealers, or "market makers" linked by telecommunications networks

38

National Association of Securities Dealers Automated Quotation (NASDAQ) system

the first electronic-based stock market and the fastest-growing part of the stock market

39

over-the-counter (OTC) market

a sophisticated telecommunications network that links dealers and enables them to trade securities

40

bull markets

markets in which securities prices are rising

41

bear markets

markets in which securities prices are falling