General
The business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to conduct economic activities such as making a profit or simply covering operating expenses.
What is Banking?
Interest Rate risk
Equity Risk
Currency Risk
What are the 3 main types of market risk?
Should consider the purchasing power of fund to maintain the stability of purchasing power
Purchasing Power
Investments which when given time, raise its own value. It could include the value of the company's shares or bonds owned by an individual, an improvement in the valuation of the property, or some other upward revaluation of fixed assets and this is called current income.
False
An institution that operates between a saver who deposits money in a bank and a borrower who receives a loan from that bank.
What is a bank as a financial intermediary?
the risk of loss when investing in foreign countries
Foreign Investment Risk
They are considered highly liquid as they are fixed-income securities that carry short maturity periods of a year or less.
what is liquidity in money market?
central bank is an organization that primarily manages a monetary system.
true
securities that provide businesses, banks, and the government with large amounts of low-cost capital for a short time.
what is money market instrument?
Large companies with impeccable credit can simply issue short-term unsecured promissory notes to raise cash.
what is commercial paper?
Bonus!!
a contract between two parties to exchange all future interest rate payments from a loan.
what is a swap?
the monetary policy regulates banks with the goal of maintaining a healthy and fair banking system.
false
This is the role of the bank intermediary
a. providing ____________
liquidity
The risk of not selling your investments at a fair price
Liquidity Risk
Bonus Question!!
a broker who loves hopping into and out of stocks they are technically not a real investor.
what is a speculator?
money market simply means to maintain price stability
true
to maintain price stability
what is the purpose of central bank?
The risk that the entity that issued the bond will run into financial difficulties and will not be able to pay your interest.
Credit Risk
Investing increases the capital of a business, company, or an entity
What is capital growth?
the interest banks charge each other to borrow fed funds.
federal funds
Municipality notes is government bonds or debt securities with a maturity of less than a year.
false