Alternative Asset Classes and Financial Terms
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Questions and Answers

What is the bid-ask spread?

The difference between the highest price that a buyer is willing to pay and the lowest price that a seller is willing to accept for an asset.

Define credit risk (default risk).

The probability of a financial loss resulting from a borrower's failure to repay a loan.

Explain what a demand instrument is.

A financial instrument that is payable on demand, at sight, or on presentation.

What is the purpose of a debt market?

<p>To facilitate the buying and selling of loan assets.</p> Signup and view all the answers

Describe the characteristics of common stock market.

<p>It represents partial ownership in a company and is the type of stock most individuals buy.</p> Signup and view all the answers

What are derivative instruments?

<p>Financial instruments that derive their performance from an underlying asset.</p> Signup and view all the answers

What is the term used to describe the chance that a company will lose money on international trade due to currency fluctuations?

<p>Foreign exchange risk</p> Signup and view all the answers

Define 'Market Capitalization.'

<p>Market Capitalization is the total dollar market value of all of a company's outstanding shares.</p> Signup and view all the answers

What are Fixed income instruments?

<p>Debt instruments that pay a fixed rate of interest.</p> Signup and view all the answers

Explain the concept of 'Financial Intermediaries.'

<p>Financial intermediaries are institutions that act as middlemen between two parties to facilitate financial transactions.</p> Signup and view all the answers

What is the significance of 'Liquidity' in the financial market?

<p>Liquidity refers to the degree to which a security can be quickly bought or sold in the market at a price reflecting its current value.</p> Signup and view all the answers

Define 'Emerging Markets.'

<p>Emerging Markets are economies that experience significant economic growth and exhibit some characteristics of developed economies.</p> Signup and view all the answers

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