FinancialMarketsChap1

FinancialMarketsChap1 - Chapter 1 1. Asset, 1- any asset...

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Chapter 1 1. Asset, 1 - any asset that has value in exchange. Tangible or intangible. 2. Call Option, 9 – an option that grants the owner the right to buy a financial option from another party. 3. Capital Market, 5- The financial market for longer-maturity financial assets. 4. Debt Instrument,2 – A claim to a financial asset that has a fixed dollar amount (not varying like equity). 5. Default risk (credit risk),3 - one of three types of risks, this is the one in which the issuer or the borrower will default on his financial obligation. 6. Derivative Instrument, 9- A type of contract whose price derives its value from an asset at some future time. Types include futures/forward contracts (obligatory) and options (optional). 7. Domestic Market,7 - one of two parts, along with foreign market, that make up the national or internal market. This is where issuers domiciled in a country issue securities and where those securities are subsequently traded. 8. Equity instrument (residual claim),2 - a claim to a financial asset that obligates the issuer of the financial asset to pay the holder an amount based on earnings (stocks, etc). 9. External Market (international market, the offshore market, the Euromarket),8 – with the internal market, makes up all financial markets. Allows trading securities with two features: 1- when issues, securities can be offered to investors in multiple countries, 2- they are issued outside the jurisdiction of any one single country. 10. Financial asset ( intangible asset),2 – unlike tangible asset, derives its value not from a physical property, but represent legal claims to some future benefit. 11. Financial Market, 1- A part of the factor market (not product market). Factor market is for labor, capital, etc. 12.
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This note was uploaded on 01/27/2010 for the course ECON 252 taught by Professor Robertshiller during the Spring '08 term at Yale.

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FinancialMarketsChap1 - Chapter 1 1. Asset, 1- any asset...

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