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50 Cards in this Set
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- Back
- 3rd side (hint)
to use money to earn interest or income, or in the hopes of making a profit; ex. buying stocks & bonds
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invest
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You should do research on the market before you ______.
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stock that offers the stockholder stated dividends but does not give the stockholder voting rights
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preferred stock
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dividends fixed at annual rate of interest & not effected by market fluctuations
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stock that gives the stockholder voting rights but may/may not offer dividends
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common stock
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dividends are effected by market fluctuations
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the use of money to earn interest or income, or to make a profit
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investment
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buying shares at low cost in a startup company in hopes that it will grow and make you a profit is an ___________.
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the money earned when you sell something for more than you paid for it
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capital gain
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one must pay taxes on ______ _____ or the profit made between purchase and selling price; "tax of the rich"
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the money lost when you sell something for less than you paid for it
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capital loss
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when an investor sells stock at a lower price than he paid for it.
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a specified amount of money a borrower must pay a lender for the use of borrowed funds
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interest
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when borrowing you want the rate to be low but when saving you want the rate to be high
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a person who is licensed to buy and sell stocks and bonds for other people
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stockbroker
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this financial agent recieves a percentage of the sale of stock or bonds for his services
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a place where stocks and bonds are traded ( bought & sold)
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stockmarket
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examples are NYSE and Nasdag
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an IOU; the person who buys a bond is lending money to the government or corporation that sells the bond
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bond
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a relatively safe investment; a formal contract to repay borrowed money at a fixed interval.
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a person or business who is owed money
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creditor
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people owe other people or companies for monthly utilities, home mortgage, insurance, rent, etc. called
a __c__________. |
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stocks or bonds
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securities
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one's investments in stocks or bonds
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the act of redirecting resources from being consumed today so that they may created benefits in the future, the use of assets to earn income or profit
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investment
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Ex. By going to school today, you give up your time now so that you will be prepared for a career in the future. This is an i___________.
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the system that allows the transfer of money between savers and borrowers
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financial system
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this is required in order for investment to take place
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claim on the property or income of a borrower
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financial asset
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also called securities
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institutions that help channel funds from savers to borrowers
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financial intermediaries
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Ex. Banks, S&Ls, Credit Unions, Finance Co., Mutual Funds, Life Ins. Co., & Pension Funds.
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a fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets.
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mutual funds
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allow people to invest in a variety of stocks, bonds, and other financial assets; vary in degree of risk
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spreading out investments to reduce risk
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diversification
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since >1/2 of all new businesses fail you want to spread out your investment
or practice d____________ |
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a collection of financial assets
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portfolio
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by collecting ones financial assets in a __p______ you can keep track of how they are performing (earning/losing $)
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an investment report to potential investors
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prospectus
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law requires financial intermediaries to provide investment report data to investors called a p________.
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the money an investor receives above and beyond the sum of money initially invested
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return
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by agreeing to give up some degree of access to money you invest, you can earn a higher interest rate on the principal = greater r______
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the interest rate that a bond issuer will pay to a bondholder
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coupon rate
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larger investment yeilds >interest rate or c_____ r____
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the time at which payment to a bondholder is due
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maturity
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Bonds m_______ rates are in 10, 20, or 30 yr. periods
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the annual rate of return on a bond if the bond were held to maturity
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yield
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a bond's y______ to maturity can vary by price due to being bought or sold several times
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low-denomination bond issued by the United States government
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savings bond
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vary betw. $50 to $10,000; used by gov't to pay for public works projects; no risk of default to owner
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a bond issued by a state or local government or municipality to finance such improvements as highways, state bldgs., libraries, parks & schools
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municipal bond
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considered safe investments as gov't has ability to raise tax to pay for them & interest in not taxable by state or Fed
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a bond that a corporation issues to raise money to expand its business
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corporate bond
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issues in larger denominations of $1000, $5000, and $10,000 w/ interest taxed as ordinary income
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an independent agency of the government that regulates financial markets and investment companies
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Securities and Exchange Commission
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The SEC enforces laws that prohibit fraud and other dishonest investment practices
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a lower-rated, potentially higher-paying bond
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junk bond
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high-yield securities w/ bond ratings of BB, Ba, or lower based on the degree of possibility the firm may default on their debt
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market in which money is lent for periods longer than a year
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capital market
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ex. long term CDs and corporate & gov't bonds w/ maturity rates > 1 yr.
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market in which money is lent for periods of less than a year
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money market
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ex, short term CDs, Treasury Bills, & money market mutual funds
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market for selling financial assets that can only be redeemed by the original holder
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primary market
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ex. savings bonds or small CDs that will likely be cashed in before maturity
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market for reselling financial assets
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secondary market
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increases liquidity to investors & promotes stock trading
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portion of stock
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share
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by selling s_____ of stock corporations can raise money
to start, run, and expand their businesses |
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claims of ownership in a corporation
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equities
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synonym for stock
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the division of a single share of stock into more than one share; however each share is worth less until prices rise
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stock split
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investers tend to like a s____ s____ because prices tend to rise afterward
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a business that specializes in trading stocks
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brokerage firm
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stockbrokers & b_____ f____
make money by charging a commission or fee on each stock transaction |
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a market for buying and selling stock
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stock exchange
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ex. NYSE or Nasdaq
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an electronic marketplace for stocks and bonds
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OTC market
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ie. Over the Counter trading electronically; investors can buy direct from a dealer or broker who searches for best price on the market
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american market for OTC securities
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Nasdaq
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its trading information is simultaneously broadcast to some 360,000 computer terminals worldwide
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contracts to buy or sell at a specific date in the future at a price specified today
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futures
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associated w/ grain or livestock exchanges
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contracts that give investors the choice to buy or sell stock and other financial assets
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options
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investors may buy or sell a particular stock at a certain price up until a certain time in the future - 3 to 6 months
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the option to buy shares of stock at a specified time in the future
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call option
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allows for speculation in future buying of stock
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the option to sell shares of stock at a specified time in the future
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put option
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allows for speculation in future selling of stock
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a steady rise in the stock market over a period of time
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bull market
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longest sustained b____ m______ was the 1980s & 1990s
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a steady drop in the stock market over a period of time
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bear market
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multiyear b_____ m_____
began in 2000. |
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index that shows how certain stocks have traded
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The Dow
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The Dow Jones Industrial Average shows daily trading since 1896
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index that shows the price changes of 500 different stocks
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S & P 500
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Standard & Poor's 500 shows a broader picture of how stocks perform mainly on the NYSE
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the collapse of the stock market in 1929
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Great Crash
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caused by widespread speculation, buying too much on credit, farm overproduction, runs on banks causing them to default & loss of people's life savings due to their investments not being insured
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the practice of making high-risk investments with borrowed money in hopes of getting a big return
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speculation
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the rapid climb of stock prices led to broad scale s__________ in the stock market
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