task
stringlengths
37
71
input
stringlengths
0
2.6k
output
stringlengths
1
4.09k
options
list
pageTitle
stringlengths
25
141
outputColName
stringlengths
1
1.03k
url
stringlengths
41
153
wdcFile
stringlengths
71
73
51104576__Midterm_Flashcards___Cram_com__agency_theory
collateralized debt [agency theory]
secured debt
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
investment bank allocates hot, underpriced IPO stock to executives in exchange for future business [agency theory]
spinning
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
bank owned by gvt., usually in developing and transition countries [agency theory]
state-owned banks
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
debt which is not collateralized (ie credit card debt) [agency theory]
unsecured debt
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
pool resources of partners and use funds to invest in young entrepreneurial ventures [agency theory]
venture capital firm
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
occurs when anincrease in asymmetric information from a disruption in the financial system prevents the financial system from channeling funds efficiently from savers to households and firms with productive investment opportunities [agency theory]
financial crisis
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
the elimination of restriction on financial markets and institutions, or the introduction of new types of loans or other financial products [agency theory]
financial liberalization
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
lending spree, dark side of financial liberalization lenders may no have expertise or incentives to manage risk appropriately in new lines of business [agency theory]
credit boom
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
reducing dependence on debt [agency theory]
deleveraging
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
rise of assets about their fundamental economic values by investor psychology (ex tech stocks late 90s) [agency theory]
asset-price bubble
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
multiple banks unable to pay off depositors and other creditors due to deteriorating balance sheets exacerbated by depositor panic (bank run) [agency theory]
bank panic
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
a substantial unanticipated decline in the price level sets in, leading to further deterioration in firms' net worth because of the increased burden of indebtedness [agency theory]
debt deflation
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
AKA risk premiums, return on securities [agency theory]
credit speads
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
combination of various debt agreements into securities [agency theory]
securitization
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
mortgage to borrower with crap credit [agency theory]
subprime mortgages
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
combining high risk mortgages into standardized debt security [agency theory]
mortgage backed securities
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
development of new, sophisticated financial instruments products [agency theory]
financial engineering
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
derived from cash flows of underlying assets, tailored to particular risk characteristics of different investors [agency theory]
structured credit products
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
paid out cash flows from subprime mortgage backed securities into tranches (higher tranches, higher in pecking order in case of default) [agency theory]
collateralized debt obligations
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
i.r.t. mortgage brokers originated subprime loans with intent to distribute (principle agent problem) [agency theory]
originate-to-distribute
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
insurance against default of MBS [agency theory]
credit default swaps
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
hedge funds, investment banks, other nondepository financial firms [agency theory]
shadow banking system
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
short term borrowing which in effect uses assets like MBSs as collateral [agency theory]
repurchase agreement (repo)
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
differential between value of collateral and value of loan (collateral > loan when collateral is shitty, like an MBS) [agency theory]
haircuts
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
economies in the early stage of market development that have recently opened up to the flow of goods, services and capital from the rest of the world [agency theory]
emerging market economies
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
elimination of restrictions on financial institutions and markets domestically and opening up economies to flows of capital and financial firms from other nations [agency theory]
financial globalization
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
speculators engage in massive sales of currency [agency theory]
speculative attack
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
wealth, expected return, risk, liquidity [agency theory]
asset components
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
emphasizes stocks of assets rather than flows, preferred by economists [agency theory]
asset market approach
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
when expected inflation rises, interest rates will rise [agency theory]
Fisher effect
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
most transactions very large, in excess of 1 million prevent individual investors from directly participating [agency theory]
wholesale markets
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
many different buyers and sellers [agency theory]
deep market
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
securities can be bought and sold quickly with low transaction costs [agency theory]
liquid market
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
treasury announces how many and what kind of T bills are for sale, accepts lowest yields first [agency theory]
competitive bidding
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
statement of how many securities wanted, no price, all accepted [agency theory]
noncompetitive bidding
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
treasury information is all on a central computer, no actual bills issued [agency theory]
book entry
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
maturity date is specified [agency theory]
term security
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
can be withdrawn at any time [agency theory]
demand deposit
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
whoever owns instrument at time of maturity receives cash flow, can be bought and sold [agency theory]
bearer instrument
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
issuer bypasses dealer and sells directly to end investor (saves commission) used for commercial paper [agency theory]
direct placement
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
short term securities (>half 1-4 days) backed by assets backed by CDOs 2004-7 [agency theory]
asset backed commercial paper
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
London Interbank Bid Rate. Rate paid by banks for funds internationally [agency theory]
LIBID
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
London Interbank Overnight Rate. Rate offered for funds for sale internationally [agency theory]
LIBOR
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
Separate trading of registered interest and principal securities, to be stripped makes every payment a zero coupon security [agency theory]
STRIPS
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
municipal bonds backed by full faith and credit of issuer (nothing specific) [agency theory]
general obligation bonds
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
municipal bonds backed by cash flow of a revenue generating project [agency theory]
revenue bonds
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
contract that states the lender's rights and privileges and the borrower's obligations [agency theory]
bond indenture
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
replaced bearer bonds, must be registered with company (reports to IRS) [agency theory]
registered bonds
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
allow issuer to force bond holder to sell bond back (at higher price) [agency theory]
call provision
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
requirement in bond indenture that firm pay off a portion of the bond issue each year [agency theory]
sinking fund
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
ensures that lender with be paid principal and interest in case of default (used by smaller firms) [agency theory]
financial guarantee
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
51104576__Midterm_Flashcards___Cram_com__agency_theory
provides insurance against default in the principle, became deregulated in 2000 [agency theory]
Credit Default Swap
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
agency theory
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] audits
independent accounting firm certifies that the firm is adhering to standard accounting principles and disclosing accurate information about sales, assets and earnings
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] collateral
reduces consequences of adverse selection by reducing lender's losses in event of a default
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] conflicts of interest
type of moral hazard problem that arises when a person or institution that has multiple objectives (interests) and as a result has conflicts between those objectives
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] costly state verification
process to monitor firm's activities is expensive, makes equity contract less desirable
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] creditors
holders of debt
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] economies of scope
(in context of banks) lower the cost of information production for different services by applying one information to different applications (e.g. evaluating loan risk, using info to help do IPO)
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] equity capital
AKA net worth, assets minus liabilities
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] free-rider problem
occurs when people who do not pay for information take advantage of information that others have paid for
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] incentive compatible
aligns incentives of borrower with those of lender
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] IPO
shares of newly issued stock issued to raise equity capital
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] pecking order hypothesis
large firm more likely to issue securities rather than equity
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] principal-agent problem
occurs when managers own small part of equity. Principal (shareholders) have different interests than agent (managers), who may act in their own interest
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] restrictive covenants
provisions of loan documents restricting certain activities by the borrower
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] secured debt
collateralized debt
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] spinning
investment bank allocates hot, underpriced IPO stock to executives in exchange for future business
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] state-owned banks
bank owned by gvt., usually in developing and transition countries
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] unsecured debt
debt which is not collateralized (ie credit card debt)
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] venture capital firm
pool resources of partners and use funds to invest in young entrepreneurial ventures
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] financial crisis
occurs when anincrease in asymmetric information from a disruption in the financial system prevents the financial system from channeling funds efficiently from savers to households and firms with productive investment opportunities
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] financial liberalization
the elimination of restriction on financial markets and institutions, or the introduction of new types of loans or other financial products
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] credit boom
lending spree, dark side of financial liberalization lenders may no have expertise or incentives to manage risk appropriately in new lines of business
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] deleveraging
reducing dependence on debt
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] asset-price bubble
rise of assets about their fundamental economic values by investor psychology (ex tech stocks late 90s)
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] bank panic
multiple banks unable to pay off depositors and other creditors due to deteriorating balance sheets exacerbated by depositor panic (bank run)
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] debt deflation
a substantial unanticipated decline in the price level sets in, leading to further deterioration in firms' net worth because of the increased burden of indebtedness
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] credit speads
AKA risk premiums, return on securities
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] securitization
combination of various debt agreements into securities
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] subprime mortgages
mortgage to borrower with crap credit
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] mortgage backed securities
combining high risk mortgages into standardized debt security
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] financial engineering
development of new, sophisticated financial instruments products
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] structured credit products
derived from cash flows of underlying assets, tailored to particular risk characteristics of different investors
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] collateralized debt obligations
paid out cash flows from subprime mortgage backed securities into tranches (higher tranches, higher in pecking order in case of default)
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] originate-to-distribute
i.r.t. mortgage brokers originated subprime loans with intent to distribute (principle agent problem)
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] credit default swaps
insurance against default of MBS
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] shadow banking system
hedge funds, investment banks, other nondepository financial firms
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] repurchase agreement (repo)
short term borrowing which in effect uses assets like MBSs as collateral
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] haircuts
differential between value of collateral and value of loan (collateral > loan when collateral is shitty, like an MBS)
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] emerging market economies
economies in the early stage of market development that have recently opened up to the flow of goods, services and capital from the rest of the world
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] financial globalization
elimination of restrictions on financial institutions and markets domestically and opening up economies to flows of capital and financial firms from other nations
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] speculative attack
speculators engage in massive sales of currency
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] asset components
wealth, expected return, risk, liquidity
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] asset market approach
emphasizes stocks of assets rather than flows, preferred by economists
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] Fisher effect
when expected inflation rises, interest rates will rise
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] wholesale markets
most transactions very large, in excess of 1 million prevent individual investors from directly participating
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] deep market
many different buyers and sellers
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] liquid market
securities can be bought and sold quickly with low transaction costs
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] competitive bidding
treasury announces how many and what kind of T bills are for sale, accepts lowest yields first
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json
1db86f1f__Midterm_Flashcards___Cram_com__blems_affect_economic_behavior
[agency theory] noncompetitive bidding
statement of how many securities wanted, no price, all accepted
[]
FINE 442 Capital Markets - Midterm Flashcards - Cram.com
analysis of how asymmetric information problems affect economic behavior
http://www.cram.com/flashcards/fine-442-capital-markets-midterm-1948188
20/1438042989234.2_20150728002309-00212-ip-10-236-191-2_379158892_0.json