Chapter 1 Preparing to Invest Flashcards
Debt
a loan that obligates the borrower to make periodic interest payments and to repay the full amount of the loan by some future date.
Securities
investments issued by firms, governments, or other organizations that represent a financial claim on the resources of the issuer.
Property
consists of investments in real property or tangible personal property.
Derivative securities
neither debt nor equity. they derive their value from an underlying security or asset.
Returns
or rewards, come in two basic forms: income and increased value.
Equity
represents ongoing ownership in a business or property.
Risk
reflects the uncertainty surrounding the return that a particular investment will generate.
Speculation
offers highly uncertain returns, and because of this greater risk, the returns associated with speculation are expected to be greater.
Short-term investments
typically mature within one year.
Long-term investments
longer maturity, or with no maturity at all.
Domestic investments
the debt, equity, and derivative securities of U.S. based companies and governments.
Foreign investments
investments outside of the U.S.
Financial Institutions
organizations such as banks and insurance companies, that pool the savings of governments, businesses, and individuals and channel them into loans and other types of assets.
Financial Markets
forums in which suppliers and demanders of funds trade financial assets, typically with the assistance of intermediaries such as securities brokers and dealers.
Individual investors
manage their own funds to achieve their financial goals.
