| agency problem | Conflicts of interest among stock-holders, bondholders, and managers.
|
 |
|
|
| auction market | A market where all traders in a good meet at one place to buy or sell an asset. The NYSE is an example.
|
|
|
|
| brokered market | A market where an intermediary (a broker) offers search services to buyers and sellers.
|
|
|
|
| bundling | A trend allowing creation of securities either by combining primitive and derivative securities into one composite hybrid or by separating returns on an asset into classes.
|
|
|
|
| dealer markets | A market where traders specializing in particular commodities buy and sell assets for their own accounts. The OTC market is an example.
|
|
|
|
| derivative security | See primitive security.
|
|
|
|
| direct search market | Buyers and sellers seek each other directly and transact directly.
|
|
|
|
| financial assets | Financial assets such as stocks and bonds are claims to the income generated by real assets or claims on income from the government.
|
|
|
|
| financial engineering | The process of bundling and unbundling securities.
|
|
|
|
| financial intermediaries | Institutions such as a bank, mutual fund, investment company, or insurance company that serves to connect the household and business sectors so households can invest and businesses can finance production.
|
|
|
|
| globalization | Tendency toward a worldwide investment environment, and the integration of national capital markets.
|
|
|
|
| investment bankers | Firms specializing in the sale of new securities to the public, typically by underwriting the issue.
|
|
|
|
| investment companies | Firms managing funds for investors. An investment company may manage several mutual funds.
|
|
|
|
| pass-through security | Pools of loans (such as home mortgage loans) sold in one package. Owners of pass-throughs receive all principal and interest payments made by the borrowers.
|
|
|
|
| primitive security | A primitive security is an instrument such as a stock or bond for which payments depend only on the financial status of its issuer. A derivative security is created from the set of primitive securities to yield returns that depend on factors beyond the characteristics of the issuer and that may be related to prices of other assets.
|
|
|
|
| real assets | Real assets are land, buildings, and equipment that are used to produce goods and services. Financial assets are claims such as securities to the income generated by real assets.
|
|
|
|
| securitization | Pooling loans for various purposes into standardized securities backed by those loans, which can then be traded like any other security.
|
|
|
|
| unbundling | See bundling.
|