Exam 1 Vocab (1,2,5)

• spot market: market where transactions are made immediately, without need for broker
• future market: market where transactions are made today to sell an asset at some later date
• money market: debt securities with maturities of less than 1 year
• capital market: market where long-term securities including stocks and bonds are traded
• example of money market: commercial paper, certificates of deposit, US Treasury bill markets
• example oof capital market: NYSE
• primary market: corporations raise capital by issuing new securities
• secondary market: investors buy or sell existing securities
• public market: contracts traded on organized exchanges
• private market: transactions woorked out directly between two parties
• investment bank: underwrite and distribute new investment securities and help businesses obtain financing
• commercial bank: traditional department stores of finance serving various borrowers and savers
• financial services corporation: can provide multiple financial services at one place (banking, insurance, investment)
• pension fund: retirement plans funded by corporations or government agencies
• mutual fund: collection of securities bought and sold by investors
• index fund: mutual fund that tracks an index, such as the S&P 500
• actively managed fund: mutual fund that tries to outperform the market; higher fees, hoping to generate higher returns
• ETF stands for exchange traded funds
• ETF: buy portfolio of stocks and sell shares to the public
• hedge fund: unregulated mutual fund that targets high net worth companies
• private equity fund: invests in private companies, usually with the intention of taking control of the company through LBO
• LBO stands for leveraged buy out
• IPO stands for initial public offering
• IPO: first time a company sells shares to the public