Ch. 8 Flashcards
The commitment of resources to a project or purpose that is expected to bring future profits to the investor
Investment
One who borrows money or capital
Debtor
One who lends money or capital
Creditor
An account that allows checks to be written up to the dollar amount. The account holder has deposited
Transaction account
An account holders written order that authorizes his bank to withdraw funds from his account
Check
A bank account that allows the account holder to earn interest on his deposits
Savings account
An account that guarantees, a certain interest rate has a specific maturity date
Certificate of Deposit or CD
And accounts that allows limited transactions and pays interest rate the changes with the demand for loans
Money market account
Federal Deposit Insurance Corporation attempts to insure private banks do not get into financial trouble
FDIC
A contract between two parties, in which one party protects the other again certain types of lost in exchange for payments called premiums
Insurance
An arrangement provided by individuals employer for the intent of providing for the employees retirement from work
Pension Plan
And employer promises to pay an employee, a certain amount per month, after retirement, based upon the employee salary, and length of service
Defined benefit plan
Employee and employer, both are required to contribute regularly to a special tax, sheltered retirement account, set up for the employee such as a 401(k)
Defined contribution plan
The resources, corporations, gather by selling ownership in their businesses
Stocks
A legal entity, which is distinct from the people who own it
Corporation
Equal portions of a corporation stock
Shares
If a corporation fails or declares bankruptcy, the individual stockholders do not personally have to pay the firms creditors
Limited liability
Shares of a corporations profit
Dividends
A document that guarantees the bond holder the amount of his original investment, plus a specified rate of interest by a certain date
Bond
Investment companies that combined the resources of all their shareholders and invest the money in a wide variety of areas
Mutual funds
Assets that flow easily, since they can be converted into other investments, or cash without much time or difficulty
Liquid investments
