CHAP 3
Cards (31)
- Most money market instruments mature in how many months?
- They sells government securities to raise funds. Short-term issuances of government securities allow the government to obtain cash until tax revenues are collected.
- Issues treasury securities; sells certificates of deposits and extend loans; offers individual investor accounts that can be used in invest in money markets.
- The primary issuer negotiable certificates of deposits, banker's acceptances and repurchase agreements.
- These entities buy and sells money market securities to manage their cash to temporarily store excess funds in exchange of somewhat higher return and obtain short-term funds.
- These companies raise money market instruments i.e. commercial paper to lend funds to individual borrowers.
- These are companies that invest in the money market to maintain liquidity level in case of unexpected demands most especially for property and casualty insurance companies.
- The funds permit small investors to invest in the money market by accumulating funds from numerous small investors to buy large-denomination money market securities.
- A resource controlled by the entity as a result of past events from which future economic benefits are expected to flow to the entity.
- The party that issues the financial instrument and agrees to make future payments to the investor. It usually needs additioanl funds for investment to grow their business.
- The party that receives and owns the financial instrument and bears the right to receive payments to be made by the issuer.
- Government securities which mature in less than a year.
- What are the three tenors of Treasury Bills?
- The treasury bills which mature in less than 91-days
- Means that the market has numerous different buyers and sellers.
- Bidders only give the amount of securities that they want to buy. They are guaranteed to received securities.
- Annualized Discount Rate
- Annualized Investment Rate
- A contract where a party which is a seller/borrower of an instrument will agree to the buyer/lender that the instrument will be repurchased or bought back on a later date at a higher price.
- Repos the can range from one to three months.
- A key component of the debt securities market that produces short-term cash or securities liquidity critical to price-making activity of fixed income dealers.
- What is the minimum and maximum days in a repo agreement?
- Securities issued by banks which record a deposit made. Treated as a term security with a specific maturity date. It cannot be easily withdrawn by the depositor. Restricts holders from withdrawing funds on demand.
- Whoever person or entity which possess the instrument upon maturity will receive the principal and interest.
- Refers to interest-bearing negotiable certificates of deposit with a minimum maturity of five years. It offers a higher return compared to regular time deposit accounts because of the long period that depositors will be unable to withdraw money.
- Unsecured promissory notes, may be short-term or long-term
- Means an evidence of indebtedness of any person with a maturity of 365 days or less.
- Refers to an order to pay a specified amount of money to the bearer on a specified date. They are often used to finance purchases of goods that have not yet been transferred from the seller to the buyer. Usually offered to importers and exporters.
- It determines the amount an investor is willing to pay in exchange for a security.
- Valuation Formula
- As a general rule, as the interest rate rises, the value of the security becomes?