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Econ
Chapter 11 Vocab
| Question | Answer |
|---|---|
| the act of redirecting resources from being consumed today so that they may create benefits in the future; the use of assets to earn income or profit. | investment |
| the network of structures and mechanisms that allow the transfer of money between savers and borrowers. | financial system |
| claim on the property or income of a borrower. | financial asset |
| institution that helps channel funds from savers to borrowers. | financial intermediary |
| organization that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets. | mutual fund |
| private investment organization that employs risky strategies to try to make huge profits for investors. | hedge fund |
| strategy of spreading out investments to reduce risk. | diversification |
| collection of financial assets | portfolio |
| investment report that provides information to potential investors | prospectus |
| money an investor receives above and beyond the sum of money initially invested. | return |
| interest rate that a bond issuer will pay to the bondholder | coupon rate |
| the time at which payment to a bondholder is due | maturity |
| bond’s state value, to be paid to the bondholder at maturity | par value |
| annual rate of return on a bond if the bond is held to maturity | yield |
| low- denomination bond issued by the United States government | savings bond |
| bond that protects the investor against inflation by its linkage to an index of inflation. | inflation index bond |
| bond issued by a state or local government or a municipality to finance a public project. | municipal bond |
| bond issued by a corporation to help raise money for expansion. | corporate bond |
| bond with high risk and potentially high yield. | junk bond |
| market in which money is lent for periods longer than a year. | capital market |
| market in which money is lent for periods of one year or less | money market |
| market for selling financial assets that can be redeemed only by the original holder. | primary market |
| market for reselling financial assets. | secondary market |
| portion of stock | share |
| difference between the selling price and purchase price that results in a financial gain for the seller | capital gain |
| difference between the selling price and purchase price that results in a financial loss for the seller. | capital loss |
| division of each single share of a company’s stock into more than one share. | stock split |
| person who links buyers and sellers of stock. | stockbroker |
| business that specializes in trading stocks. | brokerage firm |
| market for buying and selling stock. | stock exchange |
| contracts to buy or sell commodities at a particular date in the future at a price specified today. | futures |
| contracts that give investors the right to buy or sell stock and other financial assets at a particular price until a specified date. | options |
| contract for buying stock at a particular price until a specified future date. | call options |
| contract for selling stock at a particular price until a specified future date. | put options |
| steady rise in the stock market over a period of time. | bull market |
| steady drop or stagnation in the stock market over a period of time | bear market |
| practice of making high-risk investments with borrowed money in hopes of getting a big return. | speculation |
Created by:
csouder