Financial Sector

Flashcards covering key terms and definitions related to the Financial Sector based on lecture notes.

Financial Sector

A network of institutions that link borrowers and lenders, including banks, mutual funds, and pension funds.

Assets

Anything tangible or intangible that has value.

Interest Rate

The amount a lender charges borrowers for borrowing money; the 'price' of a loan.

Interest-bearing Assets

Assets that earn interest over time, such as bonds.

Personal Finance

The way individuals and families budget, save, and spend.

Investment (in Economics)

Business spending on tools and machinery.

Market Risk

The risk of losing money from fluctuations in market prices.

Default Risk

The risk that companies or individuals are unable to fulfill their payment or debt obligations.

Inflation Risk

The risk that the value of your investment shrinks from inflation.

Liquidity

The ease with which an asset can be converted to a medium of exchange.

Bonds

Securities that represent loans or IOUs that must be repaid to the lender.

Stocks

Equities that represent ownership of a corporation.

Bond Price and Interest Rates

Bond prices and interest rates are inversely related.