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ECON 317 > Chapter One Terms > Flashcards

Chapter One Terms Flashcards

1
Q

Investment

A

Asset into which funds can be placed with the expectation that it will generate income

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2
Q

Portfolio

A

Collection of different investments

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3
Q

Returns

A

Rewards from investing (Income & Increased value)

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4
Q

Securities

A

Investments issued by firms, governments, or other organizations that represent a financial claim on the resources of the issuer

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5
Q

Liquidity

A

How quickly securities sell and convert to cash quickly without incurring substantial transaction costs and without having an adverse impact on the security’s price

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6
Q

Property

A

Investments in real property or tangible personal property (land vs. objects)

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7
Q

Direct Investment

A

Investor directly acquires a claim on a security or property

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8
Q

Indirect Investment

A

Investment in a collection of securities or properties managed by a professional

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9
Q

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

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10
Q

Equity

A

Ongoing ownership in a business or property

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11
Q

Derivative securities

A

Derives value from an underlying security or asset, neither debt or equity

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12
Q

Risk

A

Uncertainty surrounding the return that a particular investment will generate

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13
Q

Diversification

A

Holding different types of assets in an investment portfolio

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14
Q

Short-Term Investments

A

Investments that typically mature within one year

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15
Q

Long-Term Investments

A

Investments with longer maturities or no maturity at all

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16
Q

Domestic Investments

A

The debt, equity and derivative securities of Canadian based companies/governments

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17
Q

Foreign Investments

A

The debt, equity and derivative securities of foreign based companies/governments

18
Q

Financial Institutions

A

Organizations that pool the resources of households and other savers and use those funds to make loans and to invest in securities

19
Q

Financial Markets

A

Markets in which suppliers and demanders of funds trade assets

20
Q

Individual Investors

A

Manage their own funds to achieve their financial goals

21
Q

Institutional Investors

A

Professionals that trade large volumes of securities for individuals, businesses and governments

22
Q

Common Stock

A

Equity investment that represents ownership in a corporation

23
Q

Dividends

A

Payments the corporation makes to its shareholders

24
Q

Capital Gains

A

When the stock price rises above an investor’s initial purchase price

25
Q

Fixed-Income Securities

A

Investments that offer a periodic cash payment that may be fixed in dollar terms or may vary according to a predetermined formula

26
Q

Bonds

A

Long-term debt instruments issued by corporations and governments

27
Q

Convertible Security

A

Fixed-income investment that permits the investor to convert it into a specified number of shares of common stock

28
Q

Preferred Stock

A

Ownership interest in a corporation and has no maturity date

29
Q

Mutual Fund

A

Portfolio of stocks, bonds, or other assets that were purchased with a pool of funds contributed by many different investors and are managed by an investment company

30
Q

Money Market Mutual Funds

A

Invest solely in short-term investments

31
Q

Exchange-Traded Funds

A

Portfolio of securities investors buy shares of on exchanges

32
Q

Hedge Funds

A

Investment funds that pool resources from many investors and invest in securities

33
Q

Options

A

Securities that give the investor an opportunity to sell or buy another security at a specified price over a given period of time

34
Q

Futures

A

Legally binding obligations stipulating that the seller of the futures contract will make delivery and the buyer of the contract will take delivery of an asset at some specified date and price agreed when sold

35
Q

Tax-Advantaged Investments

A

Provide higher after-tax returns by reducing the taxes investors must pay

36
Q

Real Estate

A

Assets such as residential homes, raw land and a variety of forms of income property

37
Q

Tangibles

A

Investment assets, other than real estate, that can be seen or touched

38
Q

Investment Goals

A

Financial objectives you wish to achieve by investing

39
Q

Capital Loss

A

When a capital asset is sold for less than its original purchase price

40
Q

Net Losses

A

The amount by which capital losses exceed capital gains

41
Q

Tax Planning

A

Looking at your earnings, both current and projected and developing strategies that will defer and minimize the level of taxes

42
Q

Discount Basis

A

Buy the security at a price below its redemption value, and the difference between what you pay to acquire the asset and what you receive is the interest earned

ECON 317 (3 decks)

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