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Economics
Chapter 11 vocab
| Question | Answer |
|---|---|
| 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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