Occurs when some parties in a transaction have more information than the other
Asymmetric information
1 of 9
Occur when the individual or firm does not pay for the full costs of their actions
Externalities
2 of 9
Any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go badly
Moral hazard
3 of 9
Refers to the risk of a breakdown of an entire financial system rather than simply the failure of individuals parts within the system
Systemic risk
4 of 9
The act of trading that has a significant risk of losing most or all the initial outlay, in expectation of a substantial gain from fluctuations in the market
Speculation
5 of 9
Occurs when the price of an asset appreciates very quickly in the short them and, in the long term, the "bubble bursts"
Market bubble
6 of 9
Refers to the state of confidence or pessimism held by consumers and businesses
Animal spirits
7 of 9
Refers to how individual decisions are influenced by group behaviour
Herding
8 of 9
Occurs when individuals or businesses deliberately inflate or deflate prices in order to gain profits
Market rigging
9 of 9
Other cards in this set
Card 2
Front
Occur when the individual or firm does not pay for the full costs of their actions
Back
Externalities
Card 3
Front
Any situation in which one person makes the decision about how much risk to take, while someone else bears the cost if things go badly
Back
Card 4
Front
Refers to the risk of a breakdown of an entire financial system rather than simply the failure of individuals parts within the system
Back
Card 5
Front
The act of trading that has a significant risk of losing most or all the initial outlay, in expectation of a substantial gain from fluctuations in the market
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