Fin Mgt Exam 3

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Author:
kelsten30
ID:
13369
Filename:
Fin Mgt Exam 3
Updated:
2010-04-06 23:45:38
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Ch 2 Ch 6
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Fin Mgt Exam 3 review
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  1. Roles of Investment Banks
    -Definition &
    -Functions
    • Def: An organization that underwrites and distributes new investment securities and helps businesses obtain financing; help companies raise capital
    • Functions: a) help corps design securities w.features that are currently attractive to investors b) buy these securities from the corp, and c) resell them to savers

  2. Major Types of Financial Intermediaries
    -Definitions
    -Primary Purpose/Function or Characteristic
    Commercial Banks
    Savings and Loans (S&Ls)
    Credit Unions
    Insurance Companies
    Mutual Funds
    Financial Services Corp
  3. Major Types of Financial Intermediaries
    -Definitions
    -Primary Purpose/Function or Characteristic
    Commercial Banks
    • Def: the traditional dept store of finance serving a variety of savers and borrowers
    • -must accept deposits & make business loans
  4. Major Types of Financial Intermediaries
    -Definitions
    -Primary Purpose/Function or Characteristic
    Savings and Loans (S&Ls)
    • Def: historically existed to accept deposits and offer home mortgages
    • -usually just do mortgages
  5. Major Types of Financial Intermediaries
    -Definitions
    -Primary Purpose/Function or Characteristic
    Credit Unions
    • Def: non-profit cooperative associations whose members have a common bond;
    • -members often enjoy higher savings & lower lending rates
    • --any $ they make goes back to the company = lower loan rates & higher deposits
    • ---often the cheapest source of funds available to individual borrowers
  6. Major Types of Financial Intermediaries
    -Definitions
    -Primary Purpose/Function or Characteristic
    Insurance Companies
    • Def: take premiums and invest funds in stocks, bonds, real estate, etc. and make pmts to beneficiaries of insured parties
    • -also provide trust services/administer pension plans
  7. Major Types of Financial Intermediaries
    -Definitions
    -Primary Purpose/Function or Characteristic
    Mutual Funds
    Def: orgs that pool investor funds to purchase financial instruments and thus reduce risks through diversification
  8. Major Types of Financial Intermediaries
    -Definitions
    -Primary Purpose/Function or Characteristic
    Financial Services Corp
  9. Functions of Commercial Banks
  10. Types of Financial Markets
  11. Roles of the FED, SEC, FDIC, and Dept. of Justice
  12. Money Market Instruments
    -All Types &
    -their Characteristics
  13. Capital Market Instruments
    -All Types &
    -their Characteristics
  14. Primary Markets vs. Secondary Markets
    -Definitions &
    -Examples
  15. Public Markets vs. Private Markets
    -Definitions &
    -Examples
  16. Types of Stock Markets
    -Definitions &
    -Examples
  17. Efficient Market Hypothesis
    -Definitions of All Forms
  18. Rela b/w Interest Rates and Inflation
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  19. Definitions of All components of the Nominal Rate of Interest on a Debt Security
  20. Yield:
    -Definition
    -Rela b/w Interest Rates (yield) and Bond Prices
  21. Term Structure of Interest Rates
    -Normal Yield curve &
    -Inverted Yield Curve
  22. Credit Ratings
    -Investment Grade vs. High Yield
    -Role of the Rating Agencies
    -What the Rating Scale Means (i.e. AAA v BB)
    -What it Means to Have a High Rating vs. Low Rating
    -What Risk are the Rating Agencies Assessing?
  23. Other Factors that Influence Interest Rate Levels in the US
  24. Investing Overseas

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