Flashcards
Chapter 10
Flashcards do conjunto (25)
- 1Physical CapitalIs the tools, instruments, machines building and other constructions that have been produced in the past and that are used to produce goods and services
- 2Financial CapitalIs the funds that firms use to buy and operate physical capital.
- 3So what increases capital and what decreases itInvestment increases capital while depreciation lowers it
- 4Gross InvestmentIs the total amount spent on new capital goods (ALL OF IT)
- 5Net InvestmentIs the change in quantity of capital = Gross Capital - Depreciation
- 6What is the difference between Gross Investment and Net InvestmentGross Investment is the total you put into the company but Net Investment is how much of the gross investment is kept because depreciation takes away from your gross investment
- 7WealthThe value of all the things a person owns
- 8SavingIs the amount of income that is not paid in taxes or spent on consumption goods and services; and adds to wealth
- 9Wealth increases when market value of assets rise. What is this calledCapital Gains
- 10Savings is the source of funds that are used to finance investment and these funds are supplied and demanded by what types of markets1. Loan Markets
2. Bonds Markets
3. Stock Markets - 11Loan MarketsThe market where households and businesses go get credit and money and borrow it to fund there things and pay back with interest
- 12Bond MarketsThe markets for bonds; or a promise to make a specified payment at a specified time. The market is the bonds that are being sold by gov or firms and being bought and resold by firms and households
- 13Stock MarketsA certificate of ownership and entitles you to a share of the profit. It can be sold at a deficit or a profit and are sold at the stock market in exchanges like NYSE or the Frankfurt SE and the Tokyo SE
- 14Financial InstitutionsIs a firm that operates on both sides of the markets for financial capital; it borrows in one market and lends in another
- 15What are key financial institutions1. Investment Banking
2. Commercial Banking
3. Pension Funds
4. Insurance Companies
5.Government Sponsored Mortgage Lenders - 16Investment Banks ( Key Financial Institution)They are firms that help other financial institutions and governments to issue stocks and bonds and also provide advice for mergers and acquisitions. (High Risk)
- 17Commercial Banking (Key Financial Institution)The bank that households use for their own banking services. EX. Home Loans, Credit Cards, etc. (Low Risk)
- 18Pension Funds (Key Financial Institutions)Financial Institutions buy stocks and bonds to make money and give retirement funds (Retirement Funds)
- 19Insurance Companies (Key Financial Institutions)Insurance for accident that will happen in the future
- 20Net WorthHow much a company is worth and is calculated by the Market Value of the company - The market value of the money borrowed
- 21InsolvencyNegative Net Worth. Happens when the Market Value of what they have borrowed exceeds what they can pay back
- 22IlliquidityWhen a company is solvent but doesn't have the funds to pay back loans or financial obligations
- 23What are stocks, bonds and loansThey are financial assets
- 24On a financial asset what is a percentage of the price of the assetInterest rates
- 25If the asset price rises with other things remaining the same what happens ?The interest rate falls
Informações
- Descrição
- Koller
- Criado por
- Omo Mora · out 2015
- Atualizado
- 7 jun 2016
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