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Financial Markets: Chapter 3
Terms in this set (21)
An increase in the market price of an asset.
A decrease in the market price of an asset.
The process of earning interest on interest, as savings accumulate over time.
A debt instrument that requires multiple payments of interest on a regular basis, such as semiannually or annually, and a payment of the face value at maturity.
Methods of financing debt, including simple loans, discount bonds, coupon bonds, and fixed payment loans.
A sustained decline in the price level.
A debt instrument in which the borrower repays the amount of the loan in a single payment at maturity but receives less than the face value of the bond initially.
The process of finding the present value of funds that will be received in the future.
A claim to part ownership of a firm; common stock issued by a corporation.
The process of buying and selling securities to profit from price changes over a brief period of time.
A debt instrument that requires the borrower to make regular periodic payments of principal and interest to the lender.
The value at some future time of an investment made today.
The risk that the price of a financial asset will fluctuate in response to changes in market interest rates.
Nominal Interest Rate
The price of one currency in terms of another currency; also called the exchange rate.
The value today of funds that will be received in the future.
Rate of Return
The return on a security as a percentage of the initial price; for a bond during a holding period of one year, the coupon payment plus the change in the price of a bond dividend by the initial price.
Real Interest Rate
An interest rate that is adjusted for changes in purchasing power.
The total earnings from a security; for a bond during a holding period of one year, the coupon payment plus the change in the price of the bond.
A debt instrument in which the borrower receives from the lender an amount called the principal and agrees to repay the lender the principal plus interest on a specific date when the loan matures.
Time Value of Money
The way that the value of a payment changes depending on when the payment is received.
Yield to Maturity
The interest rate that makes the present value of the payments form an asset equal to the asset's price today.
This set is often in folders with...
Financial Markets: Chapter 1
Financial Markets: Chapter 2
Financial Markets: Chapter 4
Financial Markets: Chapter 5
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