Money And Banking ch. 1


Anything of value owned by a person or a firm

Financial Asset

An asset that represents a claim on someone else for a payment


A financial asset that can be bought and sold in a fin. market

Financial Market

A place or channel for buying or selling stocks, bonds, and other securities.


Anything that is generally accepted in payment for goods and services or to pay off debts

Money supply

The total quantity of money in the economy


financial securities that represent partial ownership of a firm; also called equities


A payment that a corporation makes to its shareholders


A financial security issued by a corporation or a government that represents a promise to repay a fixed amount of money

Interest rate

The cost of borrowing funds (or the payment for lending funds, ), usually expressed asa a percentage of the amount borrowed

Foreign exchange

Units of foreign currency


The process of converting loans and other financial assets that are not tradable into securities

Financial Liability

A fin claim owned by a person or firm

Financial Intermediary

A fin firm, such as a bank, that borrows funds from savers and lends them to borrowers

Commercial bank

a fin firm that serves as a fin intermediary by taking in deposits and using them to make loans


collection of assets, such as stocks and bonds

Primary Market

a fin market in which stocks, bonds, and other securities are sold for he first time

Secondary Market

a fin market in which investors buy and sell existing securities

Monetary Policy

The actions the fed reserve takes to manage the money supply and interest rates to pursue macroeconomic policy objectives

Federal funds rate

the interest rate that banks charge each other on short term loans

Risk sharing

a service that financial system provides that allows savers to spread and transfer risk


the ease with which an assert can be exchanged for money


facts about borrowers and about expectations of returns on fin assets