Unit 3

  1. Business Organizations
    profit-seeking enterprise that produces goods and/or services; includes sole proprietorship, partnerships, corporations
  2. Sole Proprietorship
    unincorporated business owned and run by a single person who has rights to all profits and unlimited liability for all debts of the firm
  3. Partnerships
    unincorporated business owned and operated by two or more people who share the profits and have unlimited liability for the debts and obligations of the firm
  4. Corporations
    form of business organizations recognized by law as a separate legal entity with all the rights and responsibilities of an individual, including the right to buy and sell property, enter into legal contracts, sue and be sued
  5. Market Structure
    market classification according to number and size of firms, type of product, and type of competition
  6. Monopolistic Competition
    has all conditions of perfect competition except for identical products
  7. Nonprice Competition
    competition involving the advertising of a product's appearance, quality, or design, ratehr than its price
  8. Oligo
  9. Oligopolies
    • -market situation in which a few large sellers dominate
    • -firms produce and sell either identical or slightly differentiated products
    • -high barriers to entry
  10. Pure Monopoly
    • -is a market situation w/ only one seller of a particular economic product
    • -product has no close substitutes
    • -high barriers of entry into market
    • -no pure monopoly in US
    • -monopolies has total control over price
  11. Natural Monopoly
    Market situation where costs are minimized by having a single firm produce the product
  12. Geographic Monopoly
    Occurs when a town is too small to support two or more of the same business
  13. Technological Monopoly
    a firm or individual has discovered a new manufacturing technique or has invented something new
  14. Government Monopoly
    a business the government runs and operates that involve products that private industry cannot supply
  15. Financial System
    network of savers, investors, and financial institutions that work together to transfer savings to investment uses
  16. Bond
    formal contract to repay borrowed money and interest on the borrowed money at regular future intervals
  17. Certificates of Deposit (CDs)
    receipt showing that an investor has made an interest-bearing loan to a financial institution
  18. Stocks
    certificate of ownership in a corporation; common or preferred stock
  19. Mutual Fund
    company that sells stock in itself and use the proceeds to buy stocks and bonds issued by other companies
  20. Stockbrokers
    person who buys or sells securities for investors
  21. Stockholders
    person who owns a share or shares of stock in a corporation; sames as stockholders
  22. NYSE (Physical Exchange)
    • -physical exchange located on Wall Street in NYC
    • -oldest, largest, most prestigious stock exchange
    • -lists the shares of more than 3,000 large companies and has 1,400 broker seats
  23. NASDAQ (Over-the-Counter Exchange...aka Virtual)
    • -largest american virtual exchange where trading is done through network of computers
    • -lists stock prices for about 3,800 companies
    • -many of these companies are high-tech
  24. DOW
    • -published the average closing price for 30 representative stocks
    • -look at % change to see how market is doing
    • -uses only stocks on NYSE
  25. S & P 500
  26. S & P 500
    • -stock performance index that uses prior changes of 500 representative stocks as indicator of market performance
    • -measures stocks from more than one stock exchange
  27. NASDAQ Composite Index
    -stock performance index that uses price changes of over 3,000 representative stocks from NASDAQ ONLY
  28. Bull Market
    When stock prices are rising
  29. Bear Market
    When stock prices are falling
  30. Spot Market
    transaction is made immediately at the market price
  31. Option Market
    markets in which options are traded
  32. Call Option
    contract giving investors the option to buy commodities, equities, or financial assets at a specific future date using a price agreed upon today
  33. Put Option
    contract giving investors the option to sell commodities, equities, or financial assets at a specific future date using a price agreed upon today
Card Set
Unit 3
Business Organization, Market Structure, & Investment