[FI 301] - Midterm Exam Guide - Everything you need to know! (62 pages long)
Document Summary
Financial market: a market in which financial assets (securities) can be purchased or sold. Financial markets transfer funds from those who have excess funds to those who need funds. Surplus units: participants who receive more money than they spend. Deficit units: participants who spend more money than they receive. Equity: accommodate corporate financing needs; serves as a mechanism to help finance corporations, accommodate investments needs; serve as intermediaries. Primary markets: facilitate the issuance of new securities. Secondary markets: facilitate the trading of new securities (stocks, bonds) which allows for a change in ownership of the securities. Liquidity: the availability of liquid assets to a market or company; cash. Securities can be classified as money market securities, capital market securities or derivative securities. Money market securities: money markets facilitate the sale of short-term debt securities by deficit units to surplus units. Capital market securities: facilitate the sale of long-term securities by deficit units to surplus units.
