Markets--FINAN 450 (#8)

cmarquardt94's version from 2017-01-24 16:34

Section 1

Question Answer
Market?low cost way of exchanging assets, usually cash, for something of value. The exchange can occur as long as there is communication between the buyer & seller
Capital vs. money markets ?capital is GREATER than one year
T-bills?the shortest issuance of the safest issuer (US gov't); rate of return is proxy for the risk-free rate
CD's ?certificates of deposit-> time deposits offered by banks all over the world
Fed funds ? funds loaned and borrowed by member banks of the Federal Reserve
Commercial Paper ?short-term borrowing by corporations directly from investors; an alternative to a commercial loan
Money Market Funds?a pool of short-term debt issuances

Section 2

Question Answer
Direct Search Markets ? buyers & sellers must seek each other out; very inefficient
Broker Markets ?feature a broker who brings buyers and sellers together
Auction Markets ?feature a central location where participants gather; very transparent
Dealer Markets ? feature multiple dealers dealing in the exact same good; very economic efficient