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Econ > Chapter 11 Vocab > Flashcards

Chapter 11 Vocab Flashcards

1
Q

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

A

Investment

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2
Q

The system that allows the transfer of money between savers and borrowers

A

Financial system

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3
Q

Claim on the property or income of a borrower

A

Financial asset

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4
Q

Institution that helps channel funds from savers to borrowers

A

Financial intermediary

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5
Q

Fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets

A

Mutual fund

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6
Q

Spreading out investments to reduce risk

A

Diversification

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7
Q

A collection of financial assets

A

Portfolio

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8
Q

An investment report to potential investors

A

Prospectus

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9
Q

The money an investor receives above and beyond the sum of money initially invested

A

Return

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10
Q

The interest rate that a bond issuer will pay to a bond holder

A

Coupon rate

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11
Q

The time at which payment to a bondholder is due

A

Maturity

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12
Q

The amount that an investor pays to purchase a bond and that will be repaid to the investor at maturity

A

Par value

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13
Q

The annual rate of return on a bond if the bond were held to maturity

A

Yield

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14
Q

Low denomination bond issued by the United States government

A

Savings bond

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15
Q

A bond issued by a state or local government or municipality to finance such improvements as highways, state buildings, libraries, parks, and schools

A

Municipal bond

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16
Q

A bond that a corporation issued to raise money to expand its business

A

Corporate bond

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17
Q

An independent agency of the government that regulates financial markets and investment companies

A

Securities and exchange commission

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18
Q

A lower rated potentially higher paying bond

A

Junk bond

19
Q

Market in which money is lent for periods longer than a year

A

Capital market

20
Q

Market in which money is lent for less than a year

A

Money market

21
Q

Market for selling financial assets that can only be redeemed by the original holder

A

Primary market

22
Q

Market for reselling financial assets

A

Secondary market

23
Q

Portion of stock

A

Share

24
Q

Claims of ownership in a corporation

A

Equities

25
Q

The difference between a higher selling price and a lower purchase price, resulting in a financial gain for the seller

A

Capital gain

26
Q

The difference between a lower selling price and a higher purchase price resulting in a financial loss to the seller

A

Capital loss

27
Q

The division of a single share of stock into more than one share

A

Stock split

28
Q

A person who links buyers and sellers to stock

A

Stockbroker

29
Q

A business that specializes in trading stocks

A

Brokerage firm

30
Q

A market for buying and selling stock

A

Stock exchange

31
Q

An electronic marketplace for stocks and bonds

A

OTC market

32
Q

American market for OTC Securities

A

Nasdaq

33
Q

Contracts to buy or sell at a specific date in the future at a price specified today

A

Futures

34
Q

Contracts that give investors the choice to buy or sell stock and other financial assets

A

Options

35
Q

The option to buy shares of stock at a specified time in the future

A

Call Option

36
Q

The option to sell shares of stock at a specified time in the future

A

Put option

37
Q

A steady rise in the stock market over a period of time

A

Bull market

38
Q

A steady drop in the stock market over a period of time

A

Bear market

39
Q

Index that shows how certain stocks have traded

A

The Dow

40
Q

Index that shows the price changes of 500 different stocks

A

S&P 500

41
Q

The collapse of the stock market in 1929

A

Great crash

42
Q

The practice of making high risk investments with borrowed money in hopes of getting a big return

A

Speculation

43
Q

The three characteristics of bonds

A

Coupon rate
Maturity
Par value

Econ (18 decks)

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