Concepts
The most common debt instrument in the MM is called ______
bond
When the government spends more than what it collects, it generates a ___________
public deficit
Another word for guarantee in the context of a loan.
collateral
The financial instruments traded in the MM are known as:
negotiable values
The liquidity measures ..........
the capacity (or easiness) of an instrument to be converted into cash
This governmental debt instrument pays no coupon
CETES
This private negotiable value is issued by the commercial banks.
Certificate of deposit
These governmental values are adjusted to the inflation.
Udibonds
Maturity refers to ____________.
the time period in which the financial instrument expires (or is recollected by the issuer, in a financial sense)
How do investors obtain a gain when buying CETES?
from the difference between price and nominal value
What distinguishes the private negotiable values from the governmental ones?
they imply higher risk and, therefore, higher return
What is the essence of the Repos?
Agreement (upon sale) to repurchase the asset sold at a specified moment in the future
Mention three characteristics of the money market
-high liquidity
-low risk
-short-term focus
Name 3 factors that cause higher costs of financing for the federal government.
-restrictive regulations
-volatility in the exchange rates
-complex tax system
-elevated credit risk
-growing inflation
Please explain factoring
Consists in selling our accounts receivable (commonly certain % of them) to a bank or other institution at lower price than their explicit value
ABS stands for?
Asset-backed securities