Capital Flows and Financial Markets: Understanding Transfers and Institutions, Quizzes of Corporate Finance

Download Capital Flows and Financial Markets: Understanding Transfers and Institutions and more Quizzes Corporate Finance in PDF only on Docsity! TERM 1 Three ways to transfer capital flows with surplus capital DEFINITION 1 Direct transfer, through an investment bank, and through a financial intermediary TERM 2 Direct Transfers DEFINITION 2 When business sells its stocks or bonds directly to savers, without going through any type of financial institution. TERM 3 Primary Market Transaction DEFINITION 3 When new securities are involved and the corporation receives the sale proceeds. TERM 4 Financial Intermediary DEFINITION 4 It uses the funds received from exchanging its securities to buy and hold businesses' securities, while the saver hold the intermediary's securities. TERM 5 Physical Asset Markets DEFINITION 5 They are for products such as wheat, autos, real estate, computers and machinery. TERM 6 Financial Asset Markets DEFINITION 6 Stocks, bonds, notes, and mortgages are comprised within this. TERM 7 Spot Market DEFINITION 7 Markets in which assets are bought or sold for "on-the-spot" delivery TERM 8 Future Markets DEFINITION 8 Markets in which participants agree today to buy or sell an asset at some future date. TERM 9 Money Markets DEFINITION 9 Markets for short-term highly liquid debt securities. TERM 10 Capital Markets DEFINITION 10 Markets for intermediate- or long-term debt and corporate stocks. TERM 21 Pension Funds DEFINITION 21 Retirement plans funded by corporations or government agencies for their workers and administered primarily by the trust departments of commercial banks or by life insurance companies. TERM 22 Mutual Funds DEFINITION 22 Corporations that accept money from savers and then use these fund to buy stocks, long-term bonds, or short-term debt instruments issued by businesses or government units. TERM 23 Money Market Funds DEFINITION 23 An open-ended mutual fund that invests in short-term debt securities such as US Treasury bills and commercial paper. TERM 24 Exchange Traded Funds DEFINITION 24 Similar to regular mutual funds and are often operated by mutual fund companies. They buy portfolio stocks of a certain type and then sell their own shares to the public. TERM 25 Hedge Funds DEFINITION 25 Acollective investment scheme, often structured as a limited partnership, that invests private capital speculatively to maximize capital appreciation. They are largely unregulated and target large minimum investments investors. TERM 26 Private Equity Companies DEFINITION 26 Organizations that operate much like hedge funds; but they buy and then manage entire firms. TERM 27 Physical Location Exchanges DEFINITION 27 They are tangible entities. Each of the larger ones occupies its own building, allows a limited number of people to trade on its floor, and has an elected governing body-its board of governors. TERM 28 Over-the-Counter-Market DEFINITION 28 The trading is done directly between two parties, without any supervision of an exchange. TERM 29 Dealer Markets DEFINITION 29 Markets that includes all facilities that are needed to conduct security transactions, but the transactions are not made on the physical location exchanges. TERM 30 Closely Held Corporations DEFINITION 30 Companies that are so small that their common stocks are not actively traded. TERM 31 Publicly Owned Corporations DEFINITION 31 Corporations where the stocks of most large companies are owned by thousands of investors, most of whom are not active in management. TERM 32 Types of Stock Market Transactions DEFINITION 32 Outstanding shares of established publicly owned companies that are traded: the secondary market, additional shares sold by established publicly owned companies: the primary market, and initial public offerings made by privately held firms: the IPO market.