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Economics > Quiz 6 > Flashcards

Quiz 6 Flashcards

1
Q

What is not a financial asset ?

A

Financial Intermediaries

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2
Q

What is the main difference between a Finance Company and a Bank ?

A

A Finance Company doesn’t have savings accounts

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3
Q

The main purpose of Life insurance is to provide financial protection for the family or other beneficiary of the uninsured

A

True

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4
Q

A Pension is guaranteed, no matter what job you work in, if you work at least 20 years

A

False

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5
Q

Define diversification

A

Splitting among different investments

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6
Q

Mutual funds

A

Pool the money of investors together and invest in different assets

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7
Q

Define Liquidity

A

Money in a account turns into cash

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8
Q

Complete the sentence: the higher the risk

A

The higher the potential reward

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9
Q

Example of financial intermediary

A

Mutual funds

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10
Q

Your book mentions four types of risk. Name one

A

Credit risk

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11
Q

My Maddox believes Blockchain might be better long-term investment than cryptocurrency. Why does he feel this way ?

A

Cryptocurrency can disappear one day

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12
Q

Blockchain

A

Way it encrypts the currency

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13
Q

Cryptocurrency

A

A form of digital currency

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14
Q

What does cryptocurrency use ?

A

Cryptography

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15
Q

Cryptography

A

Art of writing and solving codes

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16
Q

Consumerism

A

The protection or promotion of the interest of consumers

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17
Q

What are we suppose to do in stock ?

A

Buy low sell high

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18
Q

Financial intermediaries

A

Institution that helps channel funds from savers to borrowers

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19
Q

Financial intermediaries include

A 
Banks, savings and loan associations, and credit unions 
Finance companies 
Mutual funds 
Life insurance companies 
Pension funds
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20
Q

Parts of a check

A 
Routing number 
Account number 
Check number
Memo line 
Sign line 
Pay to line
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21
Q

Endorsing

A

Signing of a check

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22
Q

What happens when the bank gets your name wrong on the check ?

A

You can still sign it off since the bank made the mistake

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23
Q

Assets

A

Something you own that has value

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24
Q

FDIC

A

Funds that are protected by the government

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25
Q

Finance company

A

Make a loan to consumers and small business

26
Q

Principal in deposit

A

The amount of money you deposit

27
Q

Stock broker

A

Buys part of the company
Stock
Options
Commodities

28
Q

Capital

A

Money

29
Q

Issue corporate bond

A

Government issue bonds

30
Q

Privately own

A

Own it yourself

31
Q

Publicly trade company

A

Anyone in public can own it

32
Q

Unrealized gain/loss

A

Until you sell or buy

33
Q 
Mutual funds
(Another def)
A

A way to invest in the stock market with automatic diversification

34
Q

4 types of risk

A

Credit risk
Liquidity
Inflation
Time

35
Q

Credit risk

A

Risk a chance a default on your loan

- don’t co-sign a loan

36
Q

Liquidity

A

If you need the money, you may not get it when needed

37
Q

Inflation

A 
#1 risk of money 
Your money won't keep up with inflation
38
Q

Time

A

Your money can be tied up and you can’t use it

39
Q

What the most active account ?

A

Your checking

40
Q

How do you take money out of a checking account ?

A

ATM
Check
ACH
Debit Visa card

41
Q

Emergency savings

A

1 thing to keep you out of bankruptcy

Have 3-6 month living savings
Have around 6,000-12,000

42
Q

Regular savings

A

1,000

Best to have all along with emergency saving

43
Q

Money market

A

Mutual funds invest in T-bills

44
Q

What can’t savings account keep up with ?

A

Inflation

45
Q

Bond

A

Loan

Borrowing money

46
Q

Who issues bonds ?

A

Government

Companies

47
Q

S.E.C

A

Securities Exchange Commission

over sees corp bond

48
Q

Corp bond

A

Corp issue bonds to help raise money

49
Q

Two types of bond ratings

A

Moody’s

S and P

50
Q

Difference between AAA rating and a D rating

A

AAA- smaller risk
Small interest rate
D- higher risk
High interest rate

51
Q

What happens when a individual buys a bond ?

A

They are given money to a business or government

52
Q

Creditor priority

A 
IRS
Bond holders 
Banks secured collateral 
A/P
Employees
53
Q

Stock Manipulation

A

Purposely influence the price of the stock (up or down)

54
Q

Coupon Rate

A

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

55
Q

When you buy a bond from Vegas, who is the issuer and the bondholder ?

A

Bond issuer is Vegas

Bondholder is you

56
Q

Issuer

A

Borrower

Gets money upfront

57
Q

Bondholder

A

Loaner

Gives the money

58
Q

Maturity

A

The time at which payment to a bondholder is due

typically 10, 20, or 30 years

59
Q

Par value

A

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

60
Q

Creditors

A

Anyone in the business you own money to

Economics (10 decks)

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