Introduction to Finance

Money multiplier (
m
)
Number of times the 
monetary base can be expanded or magnifi ed 
to produce a given money supply level
Mortgage
Loan backed by real property in 
the form of buildings and houses
Mortgage banking fi rms
Help 
individuals 
obtain mortgage loans by bringing together 
borrowers and institutional investors
Mortgage markets
Where loans to purchase 
real estate (buildings and houses) are originated 
in primary markets and traded in secondary 
markets
Mortgage-backed security
A debt security 
created by pooling together a group of mort-
gage loans whose periodic payments belong to 
the holders of the security
Multibank holding companies (MBHCs)
Permits a fi rm to own and control two or more 
banks
Multinational corporation
A fi rm that 
engages in international business activities 
such as the selling, or purchasing, of goods and 
services involving foreign countries
Municipal bond
Debt instrument issued by 
a state or local government
Mutual funds
Open-end investment compa-
nies that can issue an unlimited number of their 
shares to their investors and use the pooled pro-
ceeds to purchase corporate and government 
securities
Mutually exclusive projects
A project that, 
when selected, precludes others from being 
undertaken
National debt
Total debt owed by a govern-
ment 
Negative correlation
When asset returns 
move in opposite directions
Negotiable certifi cate of deposit (negotiable 
CD)
Short-term debt instrument issued by 
depository institutions to individual or institu-
tional depositors
Net exports (NE)
Exports of goods and ser-
vices minus imports