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Economics

Chapter 11 vocab

QuestionAnswer
Investment the act of redricting RESOURCES from being CONSUMED TODAY, so that they may cause BENEFITS IN THE FUTURE
Financial system the NETWORK OF STRUCTURES and mechanisms that allows the TRANSFER OF MONEY between savers and borrowers (BANK)
Financial asset a claim on the PROPERY OR INCOME of a borrower
Financial intermediary an INSTITUTION that helps CHANNEL FUNDS FROM SAVERS TO BORROWERS (MORTGAGE COMPANY)
Mutual fund an organization that POOLS the SAVINGS of many individuals and INVESTS THIS MONEY in a variety of STOCKS, BONDS, and other financial assets
Hedge fund a PRIVATE INVESTMENT ORGANIZATIONS that employs RISKY STRATEGIES that often make huge profits for investors
Diversification the strategy of SPREADING OUT INVESTMENTS to reduce risk
Portfolio a COLLECTION of financial ASSETS
Prospectus an investment REPORT that PROVIDES information to POTENTIAL INVESTORS
Return the MONEY an investor receives ABOVE AND BEYOND the sum of money initially invested
Coupon rate the INTEREST RATE that a bond issuer will pay to the bondholder
Maturity the TIME at which payment to a bondholder is due
Par value a BOND'S STATED VALUE to be paid to the bondholder at maturity
Yield the ANNUAL RATE OF RETURN on a bond if the bond is held to maturity (GET MONEY BACK)
Savings bond a LOW- DENOMIATION bond issued by the United States government (PEOPLE)
Inflation-indexed bond a bond that protects the investor against inflation by its linkage to an index of inflation
Municipal bond a bond issued by a state or local government or a municipality to finance a public project
Corporate bond a bond issued by a corporation to help raise money for expansion
Junk bond a bond with high risk and potentially high yield
Capital market a market in which money is lent for periods longer than a year
Money market a market in which money is lent for periods of ONE YEAR OR LESS
Primary market a market for selling financial assets that can be redeemed only by the original holder
Secondary market a market for reselling financial assets
Share a PORTION of stock (PIECE OF PIE)
Capital gain the difference between the selling price and purchase price that results in a financial GAIN FOR THE SELLER
Capital loss the difference betweeen the selling price and purchase price that results in a financial LOSS FOR THE SELLER
Stock split the divison of each SINGLE SHARE of a company's stock into MORE THAN ONE share
Stockbroker a person who links BUYERS AND SELLERS of stock
Brokerage firm a business that specializes in TRADING STOCKS (E*TRADE FIDELITY)
Stock exchange a MARKET to buying and SELLING STOCK (WALL STREET)
Futures contracts to BUY OR SELL COMMODITIES at a particular date IN THE FUTURE at a price specified today
Options contracts that give investors the right to buy or sell stock and other financial assets at a PARTICULAR PRICE unitl a SPECIFIED FUTURE DATE
Call option a contract for BUYING STOCK at a particular price UNTIL A SPECIFIED future DATE
Put option a contract for SELLING STOCK at a particular price until a specified future date
Bull market a steady RISE in the stock market over a period of time
Bear market a steady DROP or stagnation in the stock market over a period of time
Speculation the practice of making HIGH-RISK INVESTMENTS with borrowed money in HOPES of getting a big return (DREAM)
Share a portion of stock
Capital gain the difference between the selling price and purchase price that results in a financial gain for the seller
Capital loss the difference between the selling price and purchase price that results in a financial loss for the seller
Stock split the division of each single share of a company’s stock into more than one share
Stockbroker a person who links buyers and sellers of stock
Brokerage firm a business that specializes in trading stocks
Stock exchange a market for buying and selling stock
Futures contracts to buy or sell commodities at a particular date in the future at a price specified today
Options contracts that give investors the right to buy or sell stock and other financial assets at a particular price until a specified future date
Created by: VKimbrell718
 

 



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