Ch. 11 Terms
Terms
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- the act of redirecting resources from being consumed today so that they may create benefits in the future
- investment
- the system that allows the transfer of money between savers and borrowers
- financial system
- claim on the property or income of a borrower
- financial asset
- institution that helps channel funds from savers to borrowers
- financial intermediary
- fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other assets
- mutual fund
- spreading out investments to reduce risks
- diversification
- a collection of financial assets
- portfolio
- an investment report to potential investors
- prospectus
- the money an investor receives above and beyond the sum of money initially invested
- return
- the interest rate that a bond issuer will pay to a bondholder
- coupon rate
- the time at which payment to a bondholder is due
- maturity
- the annual rate of return on a bond if the bond were held to maturity
- yield
- low-denomination bond issued by the US government
- savings bond
- a bond issued by a state or local government municipality to finance such improvements as highways, state buildings, libraries, parks, and schools
- municipal bond
- a bond that a corporation issues to raise money to expand its business
- corporate bond
- an independent agency of the government that regulates financial markets and investment companies
- Securites and Exchange Commission
- a lower-rated, potentially higher-paying bond
- junk bond
- market in which money is lent for periods longer than a year
- capital market
- market in which money is lent for periods of less than a year
- money market
- market for selling financial assets that can only be redeemed by the original holder
- primary market
- market for reselling financial assets
- secondary market
- a portion of a stock
- share
- claims of ownership in a corporation
- equities
- the difference between a higher selling price and a lower purchase price, resulting in financial gain for the seller
- capital gain
- the difference between a lower selling price and a higher purchase price, resulting in a financial loss to the seller
- capital loss
- the division of a single share of stock into more than one share
- stock split
- a person who links buysers and sellers of stock
- stockbroker
- a business the specializes in trading stocks
- brokerage firm
- a market for buying and selling stock
- stock exchange
- an electronic marketplace for stocks and bonds
- OTC market
- American market for OTC securities
- Nasdaq
- the option to sell shares of stock at a specified time in the future
- put option
- a steady rise in the stock market over a period of time
- bull market
- a steady drop in the stock market over a period of time
- bear market
- index that shows how certain stocks have traded
- The Dow
- index that shows the price changes of 500 different stocks
- S & P 500
- the collapse of the stock market in 1929
- Great Crash
- the practice of making high-risk investments with borrowed money in hopes of getting a big return
- speculation