Chapter two FINC 3310

Mutual Funds

Organizations that pool investor funds to purchase financial instruments and thus reduce risks through diversification.

Commercial Bank

The traditional department store of finance serving a variety of savers and borrowers

Financial Services Corporations

A firm that offers a wide range of financial services, including investment banking, brokerage operations, insurance, and commercial banking.

Over-the-Counter (OTC) Market

A large collection of brokers and dealers, connected electronically by telephones and computers, that provides for trading in unlisted securities.

Investment Bank

An organizational that underwriters and distributes new investment securities and helps businesses obtain financing.

Derivative

Any financial asset whose value is derived from the value of some other "underlying" asset

Physical Location Exchanges

Formal organizations having tangible physical locations that conduct auction markets in designated ("listed") securities

Money Market Funds

Mutual funds that invest in short-term, low risk securities and allow investors to write checks against their accounts.

Primary Market

Markets in which corporations raise capital by issuing new securities

Secondary Market

Markets in which securities and other financial assets are traded among investors after they have been issued by corporations

Public Market

Markets in which standardized contracts are traded on organized exchanges.

Private Market

Markets in which transactions are worked out directly between two parties

Capital Market

The financial markets for stocks and for intermediate - or long-term debt (one year or longer).

Money Market

The financial markets in which funds are borrowed or loaned for short periods (less than one year).

Initial Public Offering (IPO) Market

The market for stocks of companies that are in the process of going public

Spot Market

The markets in which assets are bought or sold for "on-the-spot" delivery.

Futures Market

The markets in which participants agree today to buy or sell an asset at some future date.

Credit Default Swaps

are contracts that offer protection against the default of a particular security.