Financial System Flashcards
(36 cards)
It is the system that covers financial transactions and the exchange of money between investors, lender and borrowers.
Financial System
FINANCIAL SYSTEM COMPONENTS
- Financial Institutions.
- Financial Markets.
- Financial Instruments
- Financial Services
- Money
is an establishment that conductsfinancialtransactions such as investments, loans and deposits.
Financial Institution
is amarketin which people trade financialsecurities, commodities, and other fungible items of value at low transaction costs and at prices that reflect supply and demand.
Financial Market
A document (such as a check, draft, bond, share, bill of exchange, futures or options contract) that has a monetary value or represents a legally enforceable (binding) agreement between two or more parties regarding a right to payment of money.
Financial Instruments
are the economicservicesprovided by thefinanceindustry, which encompasses a broad range of businesses that manage money, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-financecompanies, stock brokerages, investment funds
Financial services
the beginning, there was no money. People engaged in ________, the exchange of merchandise for merchandise, without value equivalence.
BARTER
Some commodities, for their utility, came to be more sought than others are.
Accepted by all, they assumed the role of currency, circulating as an element of exchange for other products and used to assess their value. This was the commodity money.
Cattle, salt, cowry, fabrics
Commodity Money
As soon as man discovered ____, it was used to make utensils and weapons previously made of stone.
Metal
The first metals used in coinage were ____ and ____. Employment of these metals happened for their rarity, beauty, immunity to corrosion, economic value, and for old religious habits.
Gold & silver (copper)
In the 7thcentury B.C. the first coins resembling current ones appeared: they were small metal pieces, with fixed weight and value, and bearing an official seal, that is the mark of who has minted them and also a guaranty of their value.
Ancient coins
In the Middle Ages, the keeping of values with goldsmiths, persons trading with gold and silver items, was common. The goldsmith, as a guaranty, delivered a receipt. With time, these receipts came to be used to make payments, circulating from hand to hand, giving origin to paper money.
Paper Money
Money has greatly changed its physical aspect along the centuries.
Coins had already very small sizes, as thestater, which circulated in Aradus, Phenicia, and some reached large sizes, such as thethaler, a 17thcentury Swedish copper piece.
Different Shapes
Functions of Money
- Medium of exchange
- Unit of account
- Store of value
Money serve as a ____. It is used to make payments for goods and services. It acts as a ____ between the buyer and the seller
Medium of exchange
Money is the common standard for measuring relative worth of goods and service.
Unit of account
Money is the most liquid asset (Liquidity measures how easily assets can be spent to buy goods and services). Money’s value can be retained over time. It is a convenient way to store wealth.
Store of value
The set of coins and bank notes used by a country form its ____. The system is regulated by appropriate legislation and organized from a monetary unit, its base value.
MONETARY SYSTEM
As coins and notes ceased to be convertible into precious metal, money became more dematerialized and assumed abstract forms.
One of these forms is the check that, for simplicity of use and security offered, is being adopted by an increasing number of people in their day-by-day activities.
Cheque
CHARACTERISTICS OF GOOD MONEY
Good money is accepted by all because it serves as a medium of exchange. Metallic money is acceptable due to its utility and value. Gold and silver coins had ________. The holder can use it as money or as metal. He does not lose value in both cases.
General Acceptability
CHARACTERISTICS OF GOOD MONEY
A good money material must be ____. A metal is melted and then coins are minted. The proper designs are made on it. The money material, which can be melted, is fit for making coins. The malleable materials have impression on its face and back for recognition.
Malleable
CHARACTERISTICS OF GOOD MONEY
The good material has the quality of ____. The business needs from season to season. Paper money possess the quality of expansion and contraction of money supply.
Elastic/Elasticity
CHARACTERISTICS OF GOOD MONEY
Good money is recognized either by sight or touch. The printing of notes is secret. The imitation is not possible, because the process of coloring and the quality of paper are always in the hands of central bank. The general public is familiar with the various kinds of notes.
Recognizable
CHARACTERISTICS OF GOOD MONEY
Money should be ____. The money must not lose its value with the passage of time. Metals are most —— as compared to other forms of money. The gold and silver do not wear out quickly but it can be treated as —— due to replacement by the bank.
Durable
