Financial system/Related Articles

Glossary

(For definitions not shown below, see the economics glossary [1])

• Bill (finance) [r]: {a) A loan with a duration of no more than a year (b)a documentary record of short-term indebtedness. ^[e]
• Bond (finance) [r]: a fixed-interest security issued by governments, companies, banks and others. ^[e]
• Bretton Woods [r]: An international conference held in 1944, which set up a system of fixed exchange rates linked to the US dollar which was to be freely convertible to gold, and created the International Monetary Fund. ^[e]
• Broker [r]: Individual or firm that provides investment advise to clients and executes their buying and selling instructions, usually by acting as a market maker. ^[e]
• CDS [r]: Credit-Default Swap. An insurance agreement that guarantees protection against a bond default in return for a fee. ^[e]
• CDS spread [r]: the annual percentage charge for a credit default swap ^[e]
• Central Bank [r]: A government agency that is responsible for monetary policy and the support of the banking system (for example the Federal Reserve Board and the Bank of England). Usually responsible for controlling a country's monetary policy and preserving the value of its currency. ^[e]
• Complex interactive system [r]: A system in which an event in one of its components can have significant repercussions in many other components; and which can exist in more states than can be enumerated - including "open systems" whose operation is affected by events that have been generated from outside (such as international trade in the case of an economic system). ^[e]
• Commercial paper [r]: unsecured debt_instruments that are issued by corporations to meet short term financing needs (usually repayable after 3 months). ^[e]
• Credit risk [r]: The risk that the value of a loan-based security will fall as a result of defaults on the part of borrowers (as distinct from interest rate risks and exchange rate risks). ^[e]
• Debt_instrument [r]: A formal obligation assumed by a borrower to replay the lender in accordance with the terms of an agreement, including bonds, debentures, promissory notes, leases and mortgages. ^[e]
• Derivative [r]: An asset whose value depends upon the expected value of another asset. ^[e]
• Direct investment [r]: investment in a company's foreign operations. ^[e]
• Discount_rate [r]: (i) The percentage by which current value exceeds value in a year's time. (ii) The rate at which banks may borrow at their central bank's discount window. ^[e]
• Feedback [r]: The use of information from the monitoring of system performance either to modify or to maintain that performance. ^[e]
• Financial_Intermediary [r]: A go-between organisation that obtains finance from investors (or savers) and lends it to corporations (or other borrowers). Financial intermediaries include banks, building societies (or savings and loans associations) , life insurance companies and credit unions. ^[e]
• Financial_regulator [r]: The United States Securities and Exchange Commission gives as its mission "to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation". Financial regulators in other countries have similar responsibilities. ^[e]
• Hedging [r]: Protecting against price changes by simultaneously buying(/selling) an asset and making a futures contract to sell(/buy) it. ^[e]
• Hedge fund [r]: A limited-membership, aggressively-managed investment fund, often escaping regulation. ^[e]
• Interest rate risk [r]: The risk that the value of a fixed-rate security or loan will fall as a result of a rise in interest rates. ^[e]
• Lender of last resort [r]: An institution, that is prepared to lend money to any solvent bank that encounters a serious liquidity risk, or a threatened bank run. (The term has sometimes also been applied to financial assistance to avert insolvency that could occur for other reasons, or to financial assistance to governments). ^[e]
• Leverage [r]: (i) The use of borrowing to increase the amount of money that is available for investment or consumption. (ii) A proportional measure of indebtedness, such as the ratio of a company's debt to its shareholders' equity (the same as British "gearing"), or the ratio of the indebtedness of a household to the net value of its assets (ie net of its debts). ^[e]
• LIBOR [r]: (London Interbank Offer Rate) the rate of interest at which a group of banks (16 banks from seven countries, including the United States, Switzerland and Germany) are willing to lend to each other for periods ranging from a day to a year . ^[e]
• Liquidity [r]: (i) The quantity of available assets in its possession that an organisation could rapidly exchange for cash (assets that cannot be exchanged for cash at a particular time are considered to be "illiquid" at that time); (ii) the funding that is unconditionally available to settle claims through monetary authorities (termed "official liquidity"). ^[e]
• Liquidity risk [r]: the risk that assets cannot be sold at time when cash is needed to meet a commitment. ^[e]
• Margin account [r]: Add brief definition or description
• Margin call [r]: Add brief definition or description
• Market risk [r]: Add brief definition or description
• Money market [r]: Add brief definition or description
• Moral hazard [r]: Add brief definition or description
• Option [r]: Add brief definition or description
• Portfolio [r]: Add brief definition or description
• Selling short [r]: Add brief definition or description
• Sovereign spread [r]: Add brief definition or description

Spread   see Yield spread

• Sovereign wealth fund [r]: Add brief definition or description
• Structured investment vehicle [r]: Add brief definition or description
• Subprime lending [r]: Add brief definition or description
• Tight coupling [r]: Add brief definition or description
• Wholesale banking [r]: Add brief definition or description
• Yield spread [r]: Add brief definition or description