Econ Chpt 11 Vocab Quiz

  1. Investment
    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.
  2. Financial System
    System that allows the transfer of money between savers and borrowers.
  3. Financial Asset
    Claim on the property or income of a borrower.
  4. Financial intermediary
    Institution that helps channel funds from savers to borrowers.
  5. Mutual Fund
    Fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets.
  6. Diversification
    Spreading out investments to reduce risk.
  7. Portfolio
    A collection of financial assets.
  8. Prospectus
    An investment report to potential investors.
  9. Return
    The money an investor receives above and beyond the sum of money initially invested.
  10. Coupon Rate
    The interest rate that a bond issuer will pay to a bondholder.
  11. Maturity
    The time at which payment to a bondholder is due.
  12. Par Value
    The amount that an investor pays to purchase a bond and that will be repaid to the investor at maturity.
  13. Yield
    The annual rate of return on a bond if the bond were held to maturity.
  14. Savings Bond
    Low-denomination bond issued by the United States government.
  15. Municipal Bond
    Bond issued by a state or local goverrnment or municipality to finance such improvement as highways, state buildings, libraries, parks and schools.
  16. Corporate Bond
    Bond that a corporation issues to raise money to expand its business.
  17. Securities and Exchange Commission
    An independent agency of the government that regulates financial markets and investment companies.
  18. Junk Bond
    A lower-rated, potentially higher-paying bond.
  19. Capital Market
    Market in which money is lent for periods longer than a year.
  20. Money Market
    Market in which money is lent for periods of less than a year.
  21. Primary Market
    Market for selling financial assets that can only be redeemed by the original holder.
  22. Secondary Market
    Market for reselling financial assets.
  23. Share
    Portion of stock.
  24. Equities
    Claims of ownership in a corporation.
  25. Capital Gain
    The difference between a higher selling price and a lower purchase price, resulting in a financial gain fo the seller.
  26. Caplital Loss
    The difference between a lower selling price and a higher purchase price resulting in a financial loss to the seller.
  27. Stock Split
    The division of a single share of stock into more than one share.
  28. Stockbroker
    A person who links buyers and sellers of stock.
  29. Brockerage Firm
    A business that specializes in trading stocks.
  30. Stock Exchange
    A market for buying and selling stock.
  31. Nasdaq
    American Market for OTC securities.
  32. OTC Market
    An electronic marketplace for stocks and bonds.
  33. Futures
    Contracts to buy or sell at a specific date in the future at a price specified today.
  34. Options
    Contracts that give investors the choice to buy or sell stock and other financial assets.
  35. Call Option
    The option to buy shares of stock at a specifiied time in the future.
  36. Put Option
    The option to sell shares of stock at a specified time in the future.
  37. Bull Market
    A steady rise in the stock market over a period of time.
  38. Bear Market
    A steady drop in the stock market over a period of time.
  39. The Dow
    Index that shows how certain stocks have traded.
  40. S & P 500
    Index that shows the price changes of 500 different stocks.
  41. Great Crash
    The collapse of the stock market in 1929.
  42. Speculation
    The practice of making high-risk investments with borrowed money in hopes of getting a big return.
Card Set
Econ Chpt 11 Vocab Quiz
Words and defs for Econ Cpt 11 Vocab Quiz.