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Definition of Precautionary motive
A desire to hold cash in order to be able to deal effectively with unexpected events
The need to meet unexpected or extraordinary contingencies with a
A desire to hold cash for the purpose of being in a position to exploit any attractive
A desire to hold cash for the purpose of conducting cash based transactions.
The need for cash to take advantage of investment opportunities that may arise.
Total quantity of goods and services demanded.
Combinations of the price level and income for which the goods and services market is in equilibrium, or for which both the goods and services market and the money market are in equilibrium.
An option is at-the-money if the strike price of the option is equal to the market price of the
Also called the broker loan rate , the interest rate that banks charge brokers to finance
An amount desired, in the sense that people are willing and able to pay to obtain this amount. Always associated with a given price.
A bank deposit that can be withdrawn on demand, such as a deposit in a checking account.
Checking accounts that pay no interest and can be withdrawn upon demand.
A bank line of credit that enables a customer to borrow on a daily or on-demand basis.
A loan which must be repaid in full on demand.
Fiscal or monetary policy designed to influence aggregate demand for goods and services.
Short-term securities that are repayable immediately upon the holder's demand.
Inflation whose initial cause is excess demand rather than cost increases. See also cost-push inflation.
An event that affects the demand for goods in services in the economy.
A situation in which demand exceeds supply.
Fiat money is paper currency made legal tender by law or fiat. It is not backed by gold or silver and is not necessarily redeemable in coin. This practice has had widespread use for about the last 70 years. If governments produce too much of it, there is a loss of confidence. Even so, governments print it routinely when they need it. The value of fiat money is dependent upon the performance of the economy of the country which issued it. Canada's currency falls into this category.
demands for securities to hedge particular sources of consumption risk, beyond the usual
See money base.
money that moves across country borders in response to interest rate differences and that moves
A put option that has a strike price higher than the underlying futures price, or a call option
Any item that serves as a medium of exchange, a store of value, and a unit of account. See medium of exchange.
Composed of currency and coins outside the banking system plus liabilities to the deposit money banks.
Cash plus deposits of the commercial banks with the central bank.
Money center banks
Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.
This is the process by which "dirty money" generated by criminal activities is converted through legitimate businesses into assets that cannot be easily traced back to their illegal origins.
Related: Investment management.
Related: Investment manager.
money markets are for borrowing and lending money for three years or less. The securities in
A market that specializes in trading short-term, low-risk, very liquid
Market for short-term financial assets.
A financial market in which short-term (maturity of less than a year) debt instruments such as bonds are traded.
Financial market in which funds are borrowed or lent for short periods. (The money market is distinguished from the capital market, which is the market for long term funds.)
Money market demand account
An account that pays interest based on short-term interest rates.
Money market fund
A mutual fund that invests only in short term securities, such as bankers' acceptances,
money market fund
A type of mutual fund that invests primarily in short-term debt securities maturing in one year or less. These include treasury bills, bankers’ acceptances, commercial paper, discount notes and guaranteed investment certficates.
Money market hedge
The use of borrowing and lending transactions in foreign currencies to lock in the
Money market notes
Publicly traded issues that may be collateralized by mortgages and MBSs.
Change in the money supply per change in the money base.
A guaranteed form of payment in amounts up to and including $5,000. You might request a money order in order to pay for tuition fees at a university or a college, or for a magazine subscription.
Money purchase plan
A defined benefit contribution plan in which the participant contributes some part and
Money Rate of Interest
See interest rate, nominal.
Money rate of return
Annual money return as a percentage of asset value.
M1-A: Currency plus demand deposits
Neutrality of Money
The doctrine that the money supply affects only the price level, with no long-run impact on real variables.
In a Treasury auction, the amount by which the par value of the securities offered exceeds that of
A call option is out-of-the-money if the strike price is greater than the market price
Sale of bonds by the government to the central bank.
Quantity Theory of Money
Theory that velocity is constant, and so a change in money supply will change nominal income by the same percentage. Formalized by the equation Mv = PQ.
Real Money Supply
money supply expressed in base-year dollars, calculated by dividing the money supply by a price index.
Speculative grade bond
Bond rated Ba or lower by Moody's, or BB or lower by S&P, or an unrated bond.
Time value of money
The idea that a dollar today is worth more than a dollar in the future, because the dollar
Transaction demand (for money)
The need to accommodate a firm's expected cash transactions.
Variable rated demand bond (VRDB)
Floating rate bond that can be sold back periodically to the issuer.
The demand for a part by an outlying warehouse.
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