Financial Instruments
The written legal obligation of one party to transfer something of value to another party at some future date under certain conditions.
financial instrument
What are the places where financial instruments are bought and sold?
Financial Markets
financial institutions are the firms that provide access to?
Financial markets
What two types can you divide financial intermediaries into?
Depository institutions
Non depository insitiutions
What are the uses of financial instruments?
Means of payment, Store of value, transfer of risk,
When you place an order, it will have 4 important characteristics. List 2
The stock you wish to trade
Whether you wish to buy or sale
Order size
The price at which you wish to trade.
, a financial institution like a bank takes the resource from a lender in the form of a deposit and then provides them to a borrower in the form of a loan.
Indirect finance
What are uses of financial instruments?
Stocks, loans, and insurance
The role of financial markets...
Market liquidity, information, risk sharing
What makes a Financial instrument valuable?
Size, Timing, Likelihood, Circumstances
What is the difference between primary and secondary markets?
Primary: newly issued securities are sold
Secondary: existing securities are traded
Is it possible to pay for purchases with financial instruments, even if they don't look like much money?
If the seller, or employee will accept the company's stock as a form of payment.
Historically what have been two types of financial markets?
Centralized exchange, Over the counter markets.
Types of financial instutions
Depository institution, insurance companies, pension funds, securities firms, finance companies
Major groups of financial institutions are?
Depository Institutions.
Insurance Companies
Pension Funds
Securities Firms
Finance Companies