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Economics > Unit 3 > Flashcards

Unit 3 Flashcards

0
Q

Partnership

A

Owned by 2 or more; <$25k

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1
Q

Sole proprietorship

A

Single owner; <$25k

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2
Q

Corporation

A

Owned by stockholders; two types-closely & privately held

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3
Q

Advantages of sole, partnership and corporation

A

Sole-easy to start, few regulations
Partnership- easy to start, shared decisions
Corporation- longer life, stockholder not responsible

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4
Q

Disadvantages of sole, partnership, and corporation

A

Sole- limited resources, lack permanence, total liability
Partnership- conflict, one has liability
Corporation- difficult to start, regulations, double taxation

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5
Q

Which type of business organization is the most frequently started?

A

Sole

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6
Q

Which type produces the most goods and services?

A

Corporation

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7
Q

In what type of businesses do sole properties generally specialize?

A

Service business

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8
Q

Which type of business generates the highway percentage of net income earned in the US?

A

Corporation

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9
Q

Which type of business organization is considered the least powerful financially?

A

Sole proprietorship

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10
Q

Example of business for Sole, etc.

A

Sole- donut/nail
Partnership- doctors/dentist
Corporation- verizon

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11
Q

3 types of partnership

A

General- partners share equally responsibility/liability
Limited- business in which only 1 partner if requires to be a general partner
Limited liability- all partners are limited partners

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12
Q

Who is the CEO and how do they get into position?

A

Chief executive officer, voted by the board of directors

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13
Q

Who are the board if directors and how are they selected?

A

Policies and goals are set by the BOD/stockholders

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14
Q

What’s the role of stockholders in the corporation?

A

Vote and not running day to day activities

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15
Q

What liability do stockholders have in the event if a corporations bankruptcy?

A

None

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16
Q

Publicly and closely held corporations

A

Public-many shareholders who can buy or sell stock on the open market
Private- family held stocks

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17
Q

Three types of corporate mergers

A

Horizontal- forms competing in the same market
Vertical- firms in different stages
Conglomerate-businesses merging that make unrelated products

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18
Q

Savings accounts *

A

Risk-low
Return-low
Characteristics-very safe investment, very liquid (quickly turn savings into cash)

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19
Q

Certificate of deposit *

A

Risk_low
Return-high
-low liquidity, low risk of losing money

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20
Q

Bonds *

A

Risk-low
Return-high
-low liquidity, low risk if losing money

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21
Q

Stocks *

A

Risk-high
Return-dividends or stock splits
-rises and falls with stock

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22
Q

Mutual fund *

A

Risk-low
Return-high
-pools stock from broad range of companies

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23
Q

Mutual funds (define and describe)

A

Fund that pools the savings of many individuals and invests their money on a variety of stocks, bonds and others

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24
Q

Multinational corporations (define and describe)

A

Large corporation that produces and sells it’s good and service throughout the world

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25
Q

Franchises

A

The right to sell a good it service within an exclusive market

26
Q

Non-profit organization

A

Institution that functions like a business but doesn’t operate for a profit ex-CCA

27
Q

Cooperative

A

Business owned am operated by a group of individuals

28
Q

Trade association

A

Non profit organization that promotes the interests of a particular industry

29
Q

Professional organization

A

Non profit organization that works to improve the image, working conditions, and skills for people in a particular occupation

30
Q

Financial intermediary

A

Institution that help channel finds from savors and borrowers

31
Q

Banks

A

Takes out deposits and lends out funds to buissness/individuals

32
Q

Savings and loans

A

Takes out deposited and lends out to individuals/buissness

33
Q

Credit unions

A

Takes out deposited and lends out to individuals/buissness

34
Q

Finance companies

A

Makes loans to consumers and small buissnesses

35
Q

Life insurance companies

A

Provides financial protection to families

36
Q

Pension funds

A

Income received after working a # of years/reach age

37
Q

Explain how savings are used to promote economic growth

A

Investing/barrowing for new products

38
Q

Explain mutual funds and the concept of diversification that is achieved

A

Allows people to invest in a broad range of companies in a stock market

39
Q

Standard poors and Moody’s rating system

A

Rates bonds according to their assessment of the issuers ability to repay bonds as they mature

40
Q

Growth stock and income stock

A

Growth-no dividends, reinvents earnings

Income-pays dividends at regular times during the year

41
Q

Stock split

A

Each single share of stock splits into more than 1 share

42
Q

Stock broker

A

Buys/sells stock for individual

43
Q

Brokerage firm and stock exchange

A

Brokerage firm-Stockbrokers who specialize in trading stocks
Stock exchange- market for buying/selling

44
Q

Common and preferred stock

A

Common-voting owners

Preferred- non voting members but get dividends

45
Q

NYSE

A

handles stocks and bond transaction

46
Q

DOW

A

Top 30 companies

47
Q

NASDAQ

A

technology stocks

48
Q

S&P 500

A

tracks the price changes of 500 different stocks

49
Q

Insider trading and day trading

A

Insider- having info on a stock before it opens

Day- people who make several trades a day

50
Q

Bull and bear market

A

Bull-market rises

Bear-market falls

51
Q

Gross and net income

A

Gross-before taxes

Net-after taxes

52
Q

3 rules for a persons financial life

A

1) education
2) spend less
3) create a budget

53
Q

Budget development process

A

A budget is a plan to manage income, spending and saving.
Start with income-deduct your projected fixed variable and periodic expenses then make sure to allow for saving and taxes

54
Q

Assets and liability

A

?

55
Q

30/15 yr mortgage

A

30-higer interest, lower payment

15-higher months payment

56
Q

Credit Bureau

A

Track the bill paying habits of consumers to determined a potential borrowers credit worthiness

57
Q

Credit report

A

A written record that tracks a bar rowers bill paying habits

58
Q

FICO score

A

A mathematical model that asses a persons reliability in repaying barrowed funds

59
Q

Rank the financial institutions from the lowest interest rate to the highest

A

Lowest-credit union, commercial bank, savings and loans, payday loan companies-highest

60
Q

Factors determining a credit score

A

Payment history, amount owed, length if credit history, new credit issues, types of credit used

61
Q

4 things before choosing a credit card

A
  1. Low apr
  2. No annual fee
  3. Low penalty fee
  4. interest calculated using the average Dailey balance method
62
Q

Compound interest

A

Interest paid on the principle and on the interest earned in an account

63
Q

Rule of 72

A

72/interest rate= years to double

Economics (5 decks)

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