Economics Investing
Terms
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- stock
- partial ownership of a company
- bond
- a loan, corporate bond= a loan to a corporation
- mutual funs
- people invest in these and managers pool all of the money together to invest in a pool of stocks
- NYSE
- New York Stock Exchange, oldest and most established place where stocks are traded
- NASDAQ
- largest stock market in America, all done over computers, technology heavy
- S & P 500
- index of largest 500 companies that are traded
- growth stocks
- high P.E. ratio, >40
- value stocks
- low P.E. ratio, 15<
- beta
- measurement of volatility
- P/E ratio
- price per share/earnings per share, (high/low=high, expensive and low/high=low, cheap) market expectations of the future of a company.
- par value (bond)
- amount of the loan
- coupon
- percentage you get back each year (interest)
- bond rating
- AAA=treasury, investment grade, junk bonds= CCC-D= high risk, high return
- yield
- annual percentage return on your investment
- premium/discount bond
- bond is being sold at a lower value than its par value/ bond is being sold at higher than its par value
- dividends
- amount of money a company pays its stock holders
- broker
- stock agent
- munis
- municipal bond, a bond issued by a state or local government or municipality to finance such improvements as highways, state buildings, libraries, parks and schools
- commodities
- products that are the same no matter who produces it, such as petroleum, notebook paper or milk
- capital gain
- the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the seller
- bull/bear market
- steady rise in stock market price/steady drop in stock market price
- Three Key Economic Questions
-
-What goods and services should be produced?
-How should these goods and services be produced?
-Who consumes these goods and services? - trade-off
- an alternative we sacrifice when we make a decision
- traditional economy
- economic system that relies on habit, custom, or ritual to decide questions of production and consumption of goods and services
- market economy
- economic system in which decision on production and consumption of goods and services are based on voluntary exchange in markets
- centrally planned economy
- economic system in which the central government makese all decisions on the production and comsumption of goods and services
- production possibility frontier
- the line on a production possibilities graph that shows the maximum possible output for a specific economy
- equilibrium price
- the price of a good at which the quantity demanded and the quantity supplied are eqaul
- supply
- the amount of goods available
- demand
- the desire to own something and the ability to pay for it
- unitary elastic
- describes demand whose elasticity is exactly equal to 1
- shift in demand
-
-income
-consumer expectations
-population
-consumer tastes and advertising
-prices of related goods (complements and substitutes) - shift in supply
-
-change in production costs
-change in technology
-government policy
-natural disaster - shortage
- when less than enough of a good is produced
- surplus
- when more than enough of a good is produced
- complements
- two goods that are bought together
- substitutes
- goods used in place of one another
- economic efficiency
- making the most of resources
- economic freedom
- freedom from government intervention in the production and distribution of goods and services
- economic security
- assurance that goods and services will be available, payments will be made on time, and a safety net will protect individuals in times of economic disaster
- economic equity
- fair distribution of wealth
- economic growth and innovation
- innovation leads to economic growth, and economic growth leads to a higher standard of living