Business - Chapter 15

• Any object generally accepted by people as payment for goods and services.
• - Portable
• - Divisible
• - Durable
• - Stable

• Medium of exchange
• Store of value
• Unit of Account

• Buyers and sellers must agree on the value of money.
• The value of money depends on its supply.
• As supply goes up, value goes down
• As supply goes down, value goes up

Only the most liquid forms of money (currency and demand deposit (money in chequing account))

M1 + Saving deposits, time deposit, money market mutual funds

A deposit that requires prior notice to make a withdrawal: cannot be transfer to others by cheque.

Funds operated by investment companies that bring together pools of assets from many investors to buy short-term, low-risk financial securities.

A privately owned, profit-seeking firm that serves individuals, non-business organizations and businesses as a financial intermediary.

The management of funds left in the bank's trust

A combination of computer and communications technology that transfers funds or information into, from, within, and among financial institutions.

Eletronic machine that allows bank customers to conduct account-related activities.

A credit card-sized computer that can be programmed with "eletronic $"

Money that moves along customers and businesses via digital eletronic transmission.

Major source of short term financing

• The lowest rate charged to borrowers.
• Bank rate + 2%

• Formed in 1935. Governor is Mark Carney.
• - Sets bank rate
• - Sets monetary policy of Canada

• Treasury bonds
• Bank Rates

Safeguards funds and estates entrusted to it

Co-operative savings and lending association formed by a group with common interest.

A mutual or stock company that shares risk with its policyholders for payment of premium.

Buys a/r from a firm from less than their face value

Specialized in financing instalment purchases made by individuals or firms.

Makes personal loans to consumers

Provides funds for new and expanding firms thought to have significant potential

The principle that identical products should sell for the same price in all countries.

A trade surplus occurs

A trade deficit occurs

• 1: Local banks convert the $ to the currency required by trade associates.
• 2: Local bank sends payment in foreign currency, to the foreign trade partner.
• 3: The foreign trade partner deposits the payment in his or her own foreign-based bank.

• Bank is a corporation
• f you are a member of a credit union, you are part owner, can participate in policies/directions

Stock and bonds (which represent a secured-asset-based claim) and mutual funds that can be bought and sold.

an arbitrary value set by the issuing company's board of directors

current price of a share.

market value of a firm's stock listed on a stock exchange

Shareholders' equity divided by the number of shares of common stock standing.

Issued with a stated par value - They are paid first. No voting rights - some are callable

Organization of individuals formed to provide an institutional setting in which stocks can be bought and sold.

Market in which new stocks and bonds are bought and sold.

The sale and purchase of previously issued stocks and bonds.

individuals licensed to buy and sell securities for customers in the secondary market.

• NYSE
• TOKYO
• NASDAQ

Advice

Limited service

Self-service, no advice offered.

Many securities not listed on stock exchange

A written promise that the borrower will pay the lender, at a states future date. Principal + stated rate of interest.

interest rate + risk of company

Face Value - int % - Maturity Term - Yield % - MKT price

bonds issued by borrowers who pledge assets as collateral.

Any bond that offer bondholders the option of accepting common stock instead of cash in repayment

Any company that pools the resouces of many investors and uses those funds to purchase various types of financial securitites. - Diversification

No sales commission charged

Sales commission is charged when buy into or sell out the fund.

Mutual funds that stress socially responsible investing

Private pools of money that try to give investors a positive return regardless of stock market performance.

• Future Contracts (agreements to purchase a specified amount of commodity at a given price on a set date in the future)
• food shortage drive commodity prices up
• quite risky

The percentage of the total sales price a buyer must put up to place an order for stock or a futures contract.

• The purchased right to buy or sell a stock
• the purchased right to buy a particular stock at a certain price until a specified date
• The purchases right to sell a particular stock at a certain price until a specified date.

A measure of the market value of stocks

A period of rising stock prices

A period of falling stock prices

Market Index based on the prices of 30 of the largest firms listed on NYSE

The investor makes a down payment in a portion of the price with the rest financed by the broker

An investor "borrows" shares from the broker and sells them

Laws regulating how corporations must back up securities

A detailed registration statement about a new stock

an oder to a broker to buy or sell a certain security - only if its price is less than or equal to a given limit - if its price falls to a certain level or below - units of 100 shares - different than 100 shares