money and banking review.docx - ECON 3303 Review Sheet Exam...

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ECON 3303 Review Sheet - Exam 1 Chapter 1 Financial Assets- A financial asset is a non-physical asset whose value is derived from a contractual claim, such as bank deposits, bonds, and stocks. Financial assets are usually more liquid than other tangible assets, such as commodities or real estate, and may be traded on financial markets. Financial Market- is a market in which people trade financial securities and derivatives such as futures and options at low transaction costs. Securities include stocks and bonds, and precious metals Money- Stocks- Bonds Foreign Exchange- Securitized Loans- Securitization- is the financial practice of pooling various types of contractual debt such as residential mortgages, commercial mortgages, auto loans or credit card debt obligations (or other non-debt assets which generate receivables) and selling their related cash flows to third party investors as securities , which may be described as bonds , pass-through securities, or collateralized debt obligations (CDOs) 1. Financial Liability- A contractual obligation to deliver cash or similar to another entity or a potentially unfavorable exchange of financial assets or liabilities with another entity. 2. A contract probably to be settled in the entity's own equity and that is a nonderivative under which the entity may delivery a variable amount of its own equity instruments, or a derivative that probably will be settled other than through the exchange of cash or similar for a fixed amount of the entity's equity.
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