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Sole Proprietorship
A business owned and run by one person.
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Unlimited liability
The owner is personally and fully responsible for all losses and debts of the business
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Inventory
A stock of finished goods and parts in reverse-to keep satisfy customers or to keep production flowing smoothly.
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Limited life
Meaning that the firm legally ceases to exist when the owner dies,quits,or sells the business.
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Partnership
A business jointly owned by two or more persons.
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Limited partnership
The limited parnters have limited liability(meaning that the investor's responsibility for the debts of the busines is limited by the size of his or her investment in the firm)
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Bankruptcy
A court-granted permission to an individual or business to cease or delay debt payments.
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Corporation
a form of business organization recognized by law as a seperate legal entity having all the rights of an individual.
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Charter
a government document that gives permission to create a corporation.
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Stock
ownership certificates in the firm
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stockholders or shareholders
investors that by the shares or stock
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Dividend
a check representing a portion of the corporate earnings to each stockholder.
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Bond
a written promise to repay amount borrowed at a later date.
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principal
The amount that is borrowed (by use of bonds)
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Interest
The price paid for the use of another's money
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Double taxation
Feature of taxation that allows stockholders' dividends to be taxed both as corporate profit and as personal income.
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saving
absence of spending
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savings
the dllars that become available when people abstain from consumtion
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Financial system
a network of savers, investors, and financial institutions that work together to transfer savings to investors.
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certificates of deposit
a receipt showing an investor has made an interest-bearing loan to a bank-or a government or corporate bond.
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Financial assets
claims on property and the income of the borrower.
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financial intermediaries
finacial institutions that lend the funds that savers provide to borrowers
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Nonbank financial institutions
nondepository institutions that channel savings to borrowers.
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financial company
a firm that specializes in making loans directly to consumers ans in buying installments contracts from merchants who sell goods on credit.
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bill consolidation loans
a loan consumers use to pay off other bills
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Premium
The price insured pays for this policy and is usually paid monthly,quarterly,or annually for the length of protection
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mutual fund
a company that sells stock in itself to individual investors and then invest the money it recieves in stocks and bonds issued by other corporations
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net asset value (NAV)
the net value of the mutual fund divided by the number of shares issued by the mutual fund
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pension
a regular pament intended to provide income security to someone who has worked a certain number of years,reached a certain age,or has suffered a certain kind of injury
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real estate investment trust (REIT)
a company organized primarily to make loans to construction companies that build homes
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Risk
a situation in which the outcome is not certain,but probabilitys for each outcome can be estimated
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401(k) plan
a tax-deferred investment and savings plan that acts as a personal pension fund for employees
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coupon
the stated interest of the bond
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maturity
the life of the bond
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par value
the principal or the total amount initially borrowed that must be repaid to the lender at maturity
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current yield
the annual interest divided by the purchase price
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municipal bonds (munis)
are bonds issued by stae and local governments
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tax-exempt
meaning that the federal government does not tax the interest paid to investors.
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savings bonds
are low-denomination, nontransferable bonds issued by the united state government,usually through payroll-savings plans
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Treasury notes
united states government obligations with maturitities of two to 10 years.
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treasury bonds
have maturities ranging from 10 to as many as 30 years.
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Treasury bills
a short-term obligation with a maturity of 13, 26, or 52 weeks and a minimum denomination of $1,000
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Individual retirement accounts (IRAs)
are long-term, tax-sheltered time deposits that an employee can set up as a part of a retirement plan
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Roth IRA(Individual retirement account)
An IRA whose contributions are made after taxes so that no taxes are taken out at maturity.
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Capital market
a market where the money is oaned for more than one year.
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money market
a market where the money is loaned for periods of less than one year
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Primary market
a market wher only the original issuer can repurchase or redeem a financial asset.
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secoundary market
a market in which exsisting financial assets can be resold to new owners
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Equities
Stocks that represent ownership shares in corporations.
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Efficient market Hypthesis (EMH)
- The argument that stocks are always priced about right and that bargains are hard to find because they are followed closely by so many
- investors.
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Portfolio diversification
- The practice of holding a large number of different stocks
- so that increases in some can offset unexpected declines in others.
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securities exchanges
place where buyers ans sellers meet to trade securities
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Seats
membership,that allow access to the trading floor
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Over-the Counter market (OTC)
- an electronic marketplace for securities that are not trade
- on an organized exchange.
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Dow-Jones Industrial average (DJIA)
widely publicized measure of stock market performance on the NYSE.
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Standar & poor;s 500 (S&P 500)
- A measuring of stock that uses the price changes
- of 500 representative stocks as indicators of overall market performance.
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Bull market
- a “Strong” market with the prices moving up for
- several months or years in a row.
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Bear market
a “Mean” market, with the process of equities falling sharply for several months or years in a row
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Spot market
- a market in which a transaction is made immediately at the
- prevailing price.
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Future Contract
an agreement to buy or sell at a specific date in the future at a predetermined price.
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Futures market
the marketplaces in which futures contracts, or “futures,” are brought and sold.
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Options
are contracts that provide the right to purchase and sell commodities or financial assets at some point in the future at a price agreed upon today.
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Call option
- the right to buy a share of stock at a specified price some
- time in the future.
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Put option
the right to sell a share of stock at a specified price in the future.
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Options market
are the markets in which options are traded.
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