Framework of Financial Management Flashcards
(26 cards)
an evidence in favour of EMH which empirical tests of the strong form version of the efficient markets hypothesis have typically focused on the profitability
The Strong Form
It illustrates the quantity money supplied at a given interest rate an here’s what that looks like.
Supply Curve For Money
System `which the price of national currency as measured in units gold
Gold Standard
Asserts that Financial markets are efficient or that prices on traded assets such as share and fixed interest securities are already reflect all known information.
Efficiency Market Hypothesis
Regulatory approach is defined as enforcing a price point for a given product or service that matches the overall costs incurred by the company producing or providing.
Average cost policy
regulatory strategy of stating a specific product or service cannot be sold for above a certain price
Price ceiling
Many buyers and sellers, many products, many substitutes
Perfect Competition
price of using money
Interest rate
Consist of repurchase and reverse repurchase transactions, outright transactions, and foreign exchange swaps
Open Market Operation
Actual exchange of two currencies at specific date, rate agreed upon the deal date and the reverse exchange of the currencies at a farther date in the future, also at an interest rate agreed on deal date
Foreign Exchange Swap
Important tool to influence the aggregate demand
Fiscal Policy
Regulation w/o suppression and control w/o constriction
Prudential Regulation
Economic Conditions in w/c government’s regulatory and discretionary policies distort financial prices or interest rates, discourage saving, reduce investment, misallocate financial resources
Financial Repression
Use of commonly available information.
Information Arbitrage efficiency
Shows how the value of money changes over time
Inflation
Percentage of people willing to be employed at the prevailing wage rate, yet unable to find job opportunities
Unemployment rate
Exchange of goods and services across the international borders
International Trade
accepts deposits and provide security and convenience to their customers
Commercial bank
Existence or the development of a very wide variety of financial institutions, market instruments, services and practices in the financial system
Diversification
Conducts financial instruction such as investments, loans and deposits
Financial institution
Acts as intermediary between buyers and sellers to facilitate securities transaction.
Brokerage
Allows investors to buy and sell shares in publicly traded companies
Stock Market
Secondary market also referred to as dealer market
Over the counter
Helps to increase output by moving the economic system towards the existing production frontier
Financial System
