econ unit 4

  1. Sole Proprietorship
    A business  owned and run by one person.
  2. Unlimited liability
    The owner is personally and fully responsible for all losses and debts of the business
  3. Inventory
    A stock of finished goods and parts in reverse-to keep satisfy customers or to keep production flowing smoothly.
  4. Limited life
    Meaning that the firm legally ceases to exist when the owner dies,quits,or sells the business.
  5. Partnership
    A business jointly owned by two or more persons.
  6. 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)
  7. Bankruptcy
    A court-granted permission to an individual or business to cease or delay debt payments.
  8. Corporation
    a form of business organization recognized by law as a seperate legal entity having all the rights of an individual.
  9. Charter
    a government document that gives permission to create a corporation.
  10. Stock
    ownership certificates in the firm
  11. stockholders or shareholders
    investors that by the shares or stock 
  12. Dividend
    a check representing a portion of the corporate earnings to each stockholder.
  13. Bond
    a written promise to repay amount borrowed at a later date.
  14. principal
    The amount that is borrowed (by use of bonds)
  15. Interest
    The price paid for the use of another's money
  16. Double taxation
    Feature of taxation that allows stockholders' dividends to be taxed both as corporate profit and as personal income.
  17. saving
    absence of spending
  18. savings
    the dllars that become available when people abstain from consumtion
  19. Financial system
    a network of savers, investors, and financial institutions that work together to transfer savings to investors.
  20. certificates of deposit
    a receipt showing an investor has made an interest-bearing loan to a bank-or a government or corporate bond.
  21. Financial assets
    claims on property and the income of the borrower.
  22. financial intermediaries
    finacial institutions that lend the funds that savers provide to borrowers
  23. Nonbank financial institutions
    nondepository institutions that channel savings to borrowers.
  24. financial company
    a firm that specializes in making loans directly to consumers ans in buying installments contracts from merchants who sell goods on credit.
  25. bill consolidation loans
    a loan consumers use to pay off other bills
  26. Premium
    The price insured pays for this policy and is usually paid monthly,quarterly,or annually for the length of protection
  27. 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
  28. net asset value (NAV)
    the net value of the mutual fund divided by the number of shares issued by the mutual fund 
  29. 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
  30. real estate investment trust (REIT)
    a company organized primarily to make loans to construction companies that build homes
  31. Risk
    a situation in which the outcome is not certain,but probabilitys for each outcome can be estimated
  32. 401(k) plan
    a tax-deferred investment and savings plan that acts as a personal pension fund for employees
  33. coupon
    the stated interest of the bond
  34. maturity
    the life of the bond
  35. par value
    the principal or the total amount initially borrowed that must be repaid to the lender at maturity
  36. current yield
    the annual interest divided by the purchase price
  37. municipal bonds (munis)
    are bonds issued by stae and local governments
  38. tax-exempt
    meaning that the federal government does not tax the interest paid to investors.
  39. savings bonds
    are low-denomination, nontransferable bonds issued by the united state government,usually through payroll-savings plans
  40. Treasury notes
    united states government obligations with maturitities of two to 10 years.
  41. treasury bonds
     have maturities ranging from 10 to as many as 30 years.
  42. Treasury bills
    a short-term obligation with a maturity of 13, 26, or 52 weeks and a minimum denomination of $1,000
  43. Individual retirement accounts (IRAs)
    are long-term, tax-sheltered time deposits that an employee can set up as a part of a retirement plan
  44. Roth IRA(Individual retirement account)
    An IRA whose contributions are made after taxes so that no taxes are taken out at maturity.
  45. Capital market
    a market where the money is oaned for more than one year.
  46. money market
    a market where the money is loaned for periods of less than one year
  47. Primary market
    a market wher only the original issuer can repurchase or redeem a financial asset.
  48. secoundary market
    a market in which exsisting financial assets can be resold to new owners
  49. Equities
    Stocks that represent ownership shares in corporations.
  50. 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.
  51. Portfolio diversification
    • The practice of holding a large number of different stocks
    • so that increases in some can offset unexpected declines in others.
  52. securities exchanges
    place where buyers ans sellers meet to trade securities
  53. Seats
    membership,that allow access to the trading floor
  54. Over-the Counter market (OTC)
    • an electronic marketplace for securities that are not trade
    • on an organized exchange.
  55. Dow-Jones Industrial average (DJIA)
    widely publicized measure of stock market performance on the NYSE.
  56. 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.
  57. Bull market
    • a “Strong” market with the prices moving up for
    • several months or years in a row.
  58. Bear market
    a “Mean” market, with the process of equities falling sharply for several months or years in a row
  59. Spot market
    • a market in which a transaction is made immediately at the
    • prevailing price.
  60. Future Contract
    an agreement to buy or sell at a specific date in the future at a predetermined price.
  61. Futures market
    the marketplaces in which futures contracts, or “futures,” are brought and sold.
  62. 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.
  63. Call option
    • the right to buy a share of stock at a specified price some
    • time in the future.
  64. Put option
    the right to sell a share of stock at a specified price in the future.
  65. Options market
    are the markets in which options are traded.
Card Set
econ unit 4