Define each of the following terms: A.

Spot Markets: The markets in which assets are bought or sold for on-the spot delivery (literally within a few days). Future Markets: The markets in which participants agree today to buy or sell an asset at some future date. B. Money markets: The financial markets in which funds are borrowed or loaned for short periods (less than one year). Capital Markets: The financial markets for stocks and for intermediate or long term debt (one year or longer). C. Primary markets: Markets in which corporations raise capital by issuing new securities. Secondary markets: Markets in which securities and other financial assets are traded among investors after they have been issued by corporations. D. Private Markets: Markets in which transactions are worked out directly between two parties. Public Markets: Markets in which standardized contracts are traded on organized exchanges. E. Derivatives: Any financial asset whose value is derived from the value of some other underlying asset. F. Investment Banks: Organizations that underwrites and distributes new investment securities and helps businesses obtain financing. Commercial Banks: The traditional department store of finance serving a variety of savers and borrowers. Financial services corporations: A firm that offers a wide range of financial services, including investment banking, brokerage operations, insurance, and commercial banking. G. Mutual Funds: Organizations that pool investor funds to purchase financial instruments and thus reduce risk through diversification. Money Market Funds: Mutual funds that invest in short-term, low risk securities and allow investors to write checks against their accounts. H. Physical Location Exchanges: Formal organizations having tangible physical locations that conduct auction markets in designated securities. Over the counter market: A large collection of brokers and dealers, connected electronically by telephones and computers, that provides for trading in unlisted securities.

Dealer Market: Includes all facilities that are needed to conduct security transactions not conducted on the physical location exchanges. I. Closely Held Corporation: A corporation that is owned by a few individuals who are typically associated with the firms management. Publicly Owned Corporation: A corporation that is owned by a relatively large number of individuals who are not actively involved in the firms management. J. Going Public: The act of selling stock to the public at large by a closely held corporation or its principal stockholders. Initial Public Offering Market (IFO): The market for stocks of companies that in the process of going public. K. Efficient markets hypothesis (EMH): asserts that financial markets are "informationally efficient". That is, one cannot consistently achieve returns in excess of average market returns on a risk-adjusted basis, given the information available at the time the investment is made. I. Behavioral Finance: A field of finance that proposes psychology-based theories to explain stock market anomalies. Within behavioral finance, it is assumed that the information structure and the characteristics of market participants systematically influence individuals' investment decisions as well as market outcomes.