BU283 Study Guide - Midterm Guide: Unsecured Debt, Promissory Note, Transaction Account
Document Summary
Financial markets: where suppliers and users of capital interact; securities like shares, bonds, and others. Money markets: market for bonds with maturity of less than 1 year; zero coupon bonds (inc. bankers" acceptances, commercial paper, t-bills) Money market mutual fund: pool of investor money that"s professionally managed; Investors own shares in pooled fund and are entitled to proportionate share of earnings. Sellers of money markets find it provides low cost source of temporary funds: banks borrow to meet short term reserve requirements. Gov. funds national debts by issuing t-bills, companies use commercial paper and banker"s acceptances; banks issue commercial paper. Money market instruments move together over time b/c low risk and have short-term maturities. Capital market: market for long term securities with original maturity greater than 1 year; Securities traded fund long term investments by companies and gov. Primary market: market where securities are traded for first time and ipos are made.
