Money and Banking
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Chapter 1
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12 Terms
Assets
Things of value or useful
Money
Anything that is generally accepted in exchange for a good or service
Financial Assets
Claims on future payments, they aren’t physical objects but they derive value from contractual agreements.
Bonds
A contractual agreement from a borrower to pay back the lender with interest in a specific time period.
Stock
Represents the part ownership one has in a corporation and is a contractual claim on that coorps assets.
Checking/Savings
A contractual claim on funds and deposits with depositary interest.
Financial Market
Brings together savers and borrowers
Secondary Market
Where reselling and buying take place
Market for Risk
This is the insurance market
Federal Reserve
The central bank and monetary authority of the United States.
Central banks
The federal reserve, Bank of Japan, Bank of England, Bank of Canada
Systematic Risk
Risk that if one bank fails it could spread across the entire financial system
