Economics: C7 Stocks & Bonds & C11 Financial Markets &

Front 1

to use money to earn interest or income, or in the hopes of making a profit; ex. buying stocks & bonds

Back 1

invest

Hint 1

You should do research on the market before you ______.

Front 2

stock that offers the stockholder stated dividends but does not give the stockholder voting rights

Back 2

preferred stock

Hint 2

dividends fixed at annual rate of interest & not effected by market fluctuations

Front 3

stock that gives the stockholder voting rights but may/may not offer dividends

Back 3

common stock

Hint 3

dividends are effected by market fluctuations

Front 4

the use of money to earn interest or income, or to make a profit

Back 4

investment

Hint 4

buying shares at low cost in a startup company in hopes that it will grow and make you a profit is an ___________.

Front 5

the money earned when you sell something for more than you paid for it

Back 5

capital gain

Hint 5

one must pay taxes on ______ _____ or the profit made between purchase and selling price; "tax of the rich"

Front 6

the money lost when you sell something for less than you paid for it

Back 6

capital loss

Hint 6

when an investor sells stock at a lower price than he paid for it.

Front 7

a specified amount of money a borrower must pay a lender for the use of borrowed funds

Back 7

interest

Hint 7

when borrowing you want the rate to be low but when saving you want the rate to be high

Front 8

a person who is licensed to buy and sell stocks and bonds for other people

Back 8

stockbroker

Hint 8

this financial agent recieves a percentage of the sale of stock or bonds for his services

Front 9

a place where stocks and bonds are traded ( bought & sold)

Back 9

stockmarket

Hint 9

examples are NYSE and Nasdag

Front 10

an IOU; the person who buys a bond is lending money to the government or corporation that sells the bond

Back 10

bond

Hint 10

a relatively safe investment; a formal contract to repay borrowed money at a fixed interval.

Front 11

a person or business who is owed money

Back 11

creditor

Hint 11

people owe other people or companies for monthly utilities, home mortgage, insurance, rent, etc. called
a __c__________.

Front 12

stocks or bonds

Back 12

securities

Hint 12

one's investments in stocks or bonds

Front 13

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

Back 13

investment

Hint 13

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___________.

Front 14

the system that allows the transfer of money between savers and borrowers

Back 14

financial system

Hint 14

this is required in order for investment to take place

Front 15

claim on the property or income of a borrower

Back 15

financial asset

Hint 15

also called securities

Front 16

institutions that help channel funds from savers to borrowers

Back 16

financial intermediaries

Hint 16

Ex. Banks, S&Ls, Credit Unions, Finance Co., Mutual Funds, Life Ins. Co., & Pension Funds.

Front 17

a fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets.

Back 17

mutual funds

Hint 17

allow people to invest in a variety of stocks, bonds, and other financial assets; vary in degree of risk

Front 18

spreading out investments to reduce risk

Back 18

diversification

Hint 18

since >1/2 of all new businesses fail you want to spread out your investment
or practice d____________

Front 19

a collection of financial assets

Back 19

portfolio

Hint 19

by collecting ones financial assets in a __p______ you can keep track of how they are performing (earning/losing $)

Front 20

an investment report to potential investors

Back 20

prospectus

Hint 20

law requires financial intermediaries to provide investment report data to investors called a p________.

Front 21

the money an investor receives above and beyond the sum of money initially invested

Back 21

return

Hint 21

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______

Front 22

the interest rate that a bond issuer will pay to a bondholder

Back 22

coupon rate

Hint 22

larger investment yeilds >interest rate or c_____ r____

Front 23

the time at which payment to a bondholder is due

Back 23

maturity

Hint 23

Bonds m_______ rates are in 10, 20, or 30 yr. periods

Front 24

the annual rate of return on a bond if the bond were held to maturity

Back 24

yield

Hint 24

a bond's y______ to maturity can vary by price due to being bought or sold several times

Front 25

low-denomination bond issued by the United States government

Back 25

savings bond

Hint 25

vary betw. $50 to $10,000; used by gov't to pay for public works projects; no risk of default to owner

Front 26

a bond issued by a state or local government or municipality to finance such improvements as highways, state bldgs., libraries, parks & schools

Back 26

municipal bond

Hint 26

considered safe investments as gov't has ability to raise tax to pay for them & interest in not taxable by state or Fed

Front 27

a bond that a corporation issues to raise money to expand its business

Back 27

corporate bond

Hint 27

issues in larger denominations of $1000, $5000, and $10,000 w/ interest taxed as ordinary income

Front 28

an independent agency of the government that regulates financial markets and investment companies

Back 28

Securities and Exchange Commission

Hint 28

The SEC enforces laws that prohibit fraud and other dishonest investment practices

Front 29

a lower-rated, potentially higher-paying bond

Back 29

junk bond

Hint 29

high-yield securities w/ bond ratings of BB, Ba, or lower based on the degree of possibility the firm may default on their debt

Front 30

market in which money is lent for periods longer than a year

Back 30

capital market

Hint 30

ex. long term CDs and corporate & gov't bonds w/ maturity rates > 1 yr.

Front 31

market in which money is lent for periods of less than a year

Back 31

money market

Hint 31

ex, short term CDs, Treasury Bills, & money market mutual funds

Front 32

market for selling financial assets that can only be redeemed by the original holder

Back 32

primary market

Hint 32

ex. savings bonds or small CDs that will likely be cashed in before maturity

Front 33

market for reselling financial assets

Back 33

secondary market

Hint 33

increases liquidity to investors & promotes stock trading

Front 34

portion of stock

Back 34

share

Hint 34

by selling s_____ of stock corporations can raise money
to start, run, and expand their businesses

Front 35

claims of ownership in a corporation

Back 35

equities

Hint 35

synonym for stock

Front 36

the division of a single share of stock into more than one share; however each share is worth less until prices rise

Back 36

stock split

Hint 36

investers tend to like a s____ s____ because prices tend to rise afterward

Front 37

a business that specializes in trading stocks

Back 37

brokerage firm

Hint 37

stockbrokers & b_____ f____
make money by charging a commission or fee on each stock transaction

Front 38

a market for buying and selling stock

Back 38

stock exchange

Hint 38

ex. NYSE or Nasdaq

Front 39

an electronic marketplace for stocks and bonds

Back 39

OTC market

Hint 39

ie. Over the Counter trading electronically; investors can buy direct from a dealer or broker who searches for best price on the market

Front 40

american market for OTC securities

Back 40

Nasdaq

Hint 40

its trading information is simultaneously broadcast to some 360,000 computer terminals worldwide

Front 41

contracts to buy or sell at a specific date in the future at a price specified today

Back 41

futures

Hint 41

associated w/ grain or livestock exchanges

Front 42

contracts that give investors the choice to buy or sell stock and other financial assets

Back 42

options

Hint 42

investors may buy or sell a particular stock at a certain price up until a certain time in the future - 3 to 6 months

Front 43

the option to buy shares of stock at a specified time in the future

Back 43

call option

Hint 43

allows for speculation in future buying of stock

Front 44

the option to sell shares of stock at a specified time in the future

Back 44

put option

Hint 44

allows for speculation in future selling of stock

Front 45

a steady rise in the stock market over a period of time

Back 45

bull market

Hint 45

longest sustained b____ m______ was the 1980s & 1990s

Front 46

a steady drop in the stock market over a period of time

Back 46

bear market

Hint 46

multiyear b_____ m_____
began in 2000.

Front 47

index that shows how certain stocks have traded

Back 47

The Dow

Hint 47

The Dow Jones Industrial Average shows daily trading since 1896

Front 48

index that shows the price changes of 500 different stocks

Back 48

S & P 500

Hint 48

Standard & Poor's 500 shows a broader picture of how stocks perform mainly on the NYSE

Front 49

the collapse of the stock market in 1929

Back 49

Great Crash

Hint 49

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

Front 50

the practice of making high-risk investments with borrowed money in hopes of getting a big return

Back 50

speculation

Hint 50

the rapid climb of stock prices led to broad scale s__________ in the stock market