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Wills Econ
Term Sheet 6.6-6.7
| Question | Answer |
|---|---|
| Investment | The act of redirecting resources from being consumed today so that they may create benefits in the future; the use of assets to earn income or profit. |
| Financial System | consists of a network of savers, investors, and financial institutions that work together to transfer savings to investors |
| Financial Assets | include saving accounts, certificates of deposit, and government and corporate. This represents claims on the borrower |
| Financial Intermediaries | are financial institutions that bring together saves and leaders |
| Mutual Fund | a business that accepts deposits from many people to invest in various ways |
| Hedge Fund | an investment partnership that has freer rein to invest aggressively and in a wider variety of financial products than most mutual funds. |
| Diversification | distributing your money among a variety of investments |
| Portfolios | a collection of financial assets |
| Return | the money an investor receives above and beyond the sum of money initially invested |
| Coupon Rate | interest rate that a bond issuer will pay to a bondholder |
| Maturity | the time at which payment to a bondholder is due |
| Par Value | the amount that an investor pays to purchase a bond and that will be repaid to the investor at maturity |
| Yield | the annual rate of return on a bond if the bond were held to maturity |
| Savings Bonds | a bond issued by the government and sold to the general public. |
| Municipal Bonds | a debt security issued by a state, municipality or county to finance its capital expenditures, including the construction of highways, bridges or schools |
| Corporate Bonds | A long-term debt instrument indicating that a corporation has borrowed a certain amount of money and promises to repay it in the future under clearly defined terms. |
| Shares | a portion of stock |
| Dividends | a share's portion of the company's profit |
| Capital Gains/Loss | gain or loss stemming from the sale of a qualifying investment that has been owned for longer than 12 months at the time of sale. |
| Income Stock | pays higher-than-average dividends compared to other stock issues |
| Growth Stock | stock of a corporation that has had faster than average gains in earnings and is expected to continue to |
| Common Stock | Shares of ownership in a public corporation. The shareholder has voting rights in the corporation. |
| Preferred Stock | stock whose holders are guaranteed priority in the payment of dividends but whose holders have no voting rights |
| Stockbroker | a broker who buys and sells securities on a stock exchange on behalf of clients. |
| Brokerage Firms | a business that specializes in trading stocks |
| Stock Exchange | a market in which securities are bought and sold. |
| Bull Market | a market in which share prices are rising, encouraging buying. |
| Bear Market | a market in which prices are falling, encouraging selling. |
| Speculation | investment in stocks, property, or other ventures in the hope of gain but with the risk of loss. |
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