Ba 3303 - Study guides, Class notes & Summaries

A Ponzi scheme is a fraudulent investment scheme where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources. What is a red flag of a Ponzi scheme? - ANSWER-Overly consistent investment returns in all market cycles. An economy's _____________________ is the interaction of policy makers, a monetary system, financial institutions, and financial markets to expe...

Interest rates - ANSWER--The cost of borrowing money stated as a percentage of the loan -A measure of what an investor can expect on a debt related investment. Basis point - ANSWER-Common term for a unit of interest rates in finance 1 basis point = .01% 100 basis points = 1.00% Nominal interest rate - ANSWER-Interest rate that is observed in the marketplace Risk free rate - ANSWER-Interest rate on a debt instrument with no default, maturity, or liquidity risks (Treasury securities ar...