Chapter 9 (sources of capital) Flashcards
The exchange of property ownership and payment between two individuals or groups is known as
financial investment
Which of the following is an example of a flexible expense?
A monthly rent payment
A (blank) is a person who lends money to a company.
bondholder
Economists measure savings to
determine the strength of the economy
State and federal deposit insurance provides (blank) for people who deposit money in a bank or some other type of financial institution
security
The total cost of credit expressed in dollars and cents
finance charge
The total cost of credit expressed in percentage form
annual percentage rate
Interest on the money that is owed to a bond holder
yield
Type of payment that remains the same from month to month
fixed expense
Person who links the buyers and sellers of stock
broker
Equal amounts into which repayment of a loan is divided
installments
Charging interest above the legal limit
usury
Practiced when investors use money to create a new capital good
real investment
The difference between the higher selling price and lower original price of stock
capital gain
Creditors develop a (blank) to estimate the probability of a borrower repaying a loan.
credit rating
Stock prices can be affected by (blank), such as the assassination of a world leader.
external forces
The non-consumption of disposable income is called (blank).
saving
Which of the following is an example of a fixed expense?
A monthly mortgage payment
The (blank) of CDs range from less than a month to several years.
maturities
Which of the following can consumers in a free-enterprise economy choose to do with their money?
- save it
- spend it
- consume it
A stock split is generally beneficial to stockholders because
stock prices tend to rise afterwards
In saving, the cost of high (blank) is low interest rates.
liquidity
Most financial institutions are protected by
- state and federal deposit insurance
- state and local regulations
- local zoning laws
A stock is “blue chip” when
- the company produces high-quality products and has good long term prospects
- it has long term stability and value
- it is in demand at any time
Capital accumulation promotes economic (blank).
growth
An example of a time deposit is a
- certificate of stock
- credit card
- savings bond
When you deposit money in a financial institution, you receive payment called (blank) in return for the use of your money.
interest
Which of the following is a reason for saving money?
- To make a major purchase, such as a car or house
- For unexpected expenses, such as major home repairs
- For long term expenses, such as college tuition
The (blank) tends to drop during periods of high unemployment.
savings rate
