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BA 115 Final Exam 2
Ch. 19 and 20
| Question | Answer |
|---|---|
| the first public offering of a corporation's stock | initial public offering (IPO) |
| specialists who assist in the issue and sale of new securities | investment bankers |
| large organizations, such as pension funds, mutual funds, and insurance companies, that invest their own fund or the funds of others | institutional investors |
| an organization whose members can buy and sell securities for companies and individual investors | stock exchange |
| exchange that provides a means to trade stocks not listed on the national exchanges | over-the-counter market (OTC) |
| a nationwide electronic system that links dealers across the nation so that they can buy and sell securities electronically | NASDAQ |
| Federal agency that has responsibility for regulating the various stock exchanges | Securities and Exchange Commission (SEC) |
| a condensed version of economic and financial information that a company must file with the SEC before issuing stock; must be sent to prospective investors | prospectus |
| shares of ownership in a company | stock |
| evidence of stock ownership that specifies that name of the company, the number of shares it represents, and the type of stock being issued | stock certificate |
| part of a firm's profits that the firm may distribute to stockholders as either cash payments or additional shares of stock | dividends |
| the most basic form of ownership in a firm; it confers voting rights and the right to share in the firm's profits through dividend, if approved by the firm's board of directors | common stock |
| stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold | preferred stock |
| a corporate certificate indicating that a person has lent money to a firm (or a government) | bond |
| the exact date the issuer of a bond must pay the principal to the bondholder | maturity date |
| the payment the issuer of the bond makes to the bondholders for the use of the borrowed money | interest |
| bonds that are unsecured | debenture bonds |
| a reserve account in which the issuer of a bond periodically retires some part of the bond principal prior to maturity so that enough capital will be accumulated by the maturity date to pay off the bond | sinking fund |
| a registered representative who works as a market intermediary to buy and sell securities for clients | stockbroker |
| buying several different investment alternatives to spread the risk of investing | diversification |
| an action by a company that gives stockholders two or more shares of stock for each one they own | stock splits |
| purchasing stock by borrowing some of the purchase cost from the brokerage firm | buying stock on margin |
| high risk, high interest bonds | junk bonds |
| an organization that buys stocks and bonds and then sells shares in those securities to the public | mutual fund |
| collections of stock and bonds that are traded on exchanges but are traded more like individual stocks than like mutual funds | exchange-traded fund (ETFs) |
| the average cost of 30 selected industrial stocks, used to give an indication of the direction (up or down) of the stock market over time | Dow Jones Industrial Average (the Dow) |
| giving instruction to computer to automatically sell if the price of a stock dips to a certain point to avoid potential losses | program trading |
| anything that people generally accept as payment for goods and services | money |
| the direct trading of goods or services for other goods or services | barter |
| the amount of money the Federal Reserve Bank makes available for people to buy goods and services | money supply |
| money that can be accessed quickly and easily (coins, paper money, and checks | M-1 |
| money included in M-1 plus money that may take a little more time to obtain (savings accounts, money market accounts, and mutual funds) | M-2 |
| M-2 plus big deposit like institutional money market funds | M-3 |
| a percentage of commercial banks' checking and savings accounts that must be physically kept in the bank | reserve requirement |
| the buying and selling of US government bonds by the Fed with the goal of regulating the money supply | open market operations |
| the interest rate that the Fed charges for loans to member banks | discount rate |
| a profit-seeking organization that receives deposits from individuals and corporations in the form of checking and savings accounts and then uses some of these funds to make loans | commercial bank |
| the technical name for a checking account; the money in it can be withdrawn anytime on demand from the depositor | demand deposit |
| the technical name for a savings account; the bank can require prior notice before the owner withdraws money from this | time deposit |
| a time deposit (savings) account that earns interest to be delivered at the end of the certificate's maturity date | certificate of deposit (CD) |
| a financial institution that accepts both savings and checking deposits and provides home mortgage loans | savings and loan association (S&L) |
| nonprofit, member owned financial cooperatives that offer the full variety of banking services to members | credit unions |
| financial organizations that accept no deposits but offer many of the services provided by regular banks (pension funds, insurance companies, consumer finance companies) | nonbanks |
| amounts of money put aside by corporations, nonprofit organizations, or unions to cover part of the financial needs of members when they retire | pension funds |
| an independent agency of the US government that insures bank deposits | Federal Deposit Insurance Corporation (FDIC) |
| the part of the FDIC that insures holders of accounts in savings and loan association | Savings Association Insurance Fund (SAIF) |
| a computerized system that electronically performs financial transactions such as making purchases, paying bills, and receiving paychecks | electronic funds transfer (EFT) system |
| an electronic funds transfer tool that services the same function as checks; it withdraws funds from a checking account | debit card |
| an electronic funds transfer tool that is a combination credit card, debit card, phone card, driver's license card, and more | smart card |
| a promise by the bank to pay the seller a given amount if certain conditions are met | letter of credit |
| a promise that the bank will pay some specified amount at a particular time | banker's acceptance |
| the bank primarily responsible for financing economic developments; also known as the International Bank for Reconstruction and Development | World Bank |
| Organization that assists the smooth flow of money among nations | International Monetary Fund (IMF) |
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forevermoody
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