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85 Cards in this Set
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barter economy
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moneyless economy that relies on trade
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money
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substance tht serves as medium of exchange, a measure of value, and a store of value
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medium of exchange
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common denominator tht can b used to express worth in terms tht most individuals understand
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store of value
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property tht allows purchasin power can b stored until needed
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commodity money
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money tht has an alt. use as an economic good or commodity
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fiat money
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money by gov. decree
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specie
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money in form of coins made frm silver or gold
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monetary unit
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standard unit of currency
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monetary standard
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mechanism designed to keep money supply portable, durable, divisivble and limited in supply
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state bank
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receives its charter to operate from a state gov.
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legal tender
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fiat currency tht must b accepted in payment for debts
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US notes
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fed. fiat currency issued in 1862 tht had no gold or silver backing
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national bank
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privately owned bank chartered by fed. gov.
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national bank note/ national currency
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ppr currency of uniform appearance tht was backed by US gov. bonds
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gold certificate
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ppr currency backed by gold placed on deposit with US treasury
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silver certificate
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ppy currency backed by silver dollards and bullion places on reserve w/ treasury
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treasury coin notes
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ppr currency issued by treasury tht was redeemable in both gold and silver
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gold standard
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monetary stndrd undr whch basic currency unit is equivilant to, & can b xchngd for a specific amnt of gld
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inconvertable fiat money standard
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monetary stndrd undr whch fiat money supply cnt b converted n2 gld or silver by its citizens
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fed. reserve system
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US's first true central bank
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central bank
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bank tht lends to othr banks in times of need
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fed. reserve notes
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ppy currency issued by fed. tht eventually replaces all othr types of currency
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run on the bank
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rush by depositorsto w/draw their funds from a bank before it failed
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bank holiday
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brief period of during which every bank in country was required to close
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commerical bank
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banks tht catered to interests of business and commerce
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demand deposit accounts (DDAs)
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accounts whose funds cld b removed by simply writing a check w/out prior approval frm depository institution
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thrift institutions
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financial instituions tht accepted deposits of small investors but didn't have DDas until mid 1970s
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mutual savings bank (MSB)
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a depostior owned financial org. operated only for benefit of its depositors
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savings bank
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thrift insititutions growing out of mutual savings banks
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NOW account
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type of checking account tht pays interest
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savings and loan association (S&L)
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depository institution tht invests majority of its funds in home mortgages
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credit union
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nonprofit service cooperative tht is owned by and operated for benefit of its members
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share draft accounts
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interest earning checking account issued by credit unions
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deregulation
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removal or relaxation of gov. restrictions on business
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creditor
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person or institution to whom money is owed
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saving
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not spending; equals disposable income(after tax) minus spnding on consumption
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savings
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dollars tht become available in the absence of consumption
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financial system
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network of savers, investors, and financial instituions tht wrk together to transfer savings to investors
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certificate of deposit
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receipt showing that an investor has made an interest-bearing loan to a bank
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financial assets
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claims on property and income of a borrower
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financial intermediaries
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financial institutions tht bring the funds tht savers provide and lend them to others
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finance company
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firm tht makes loans directly to consumers and specializes in buying installment contracts from merchants who sell goods on credit
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bill consolidation loan
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loan used by consumers to pay pay off other bills
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premium
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price insured person pays reguarly for an insurance policy
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mutual fund
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a company tht sells tock in itself to individual investors and then invests money it recieves in stocks and bonds issued by other corporations
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net asset value (NAV)
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net value of mutual fund divided by number of shares issued by the mutual fund
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pension
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a regular payment intended to provide income security to someone who has worked a certain # of yrs, reached a certain age, or suffered a certain kind of injury
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pension fund
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fund set up to collect income and disburse payments to those persons eligible for retirement, old-age, or disability benefits
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real estate investment trust (REIT)
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company organized primarily to make loans to compaines tht build homes
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risk
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a situation in which the outcome is not certain, but probablities of different outcomes can be estimated
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401(K) plan
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taz-deferred investment and savings plan tht acts a s personal pension fund for employees
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coupon
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stated interest on debt
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maturity
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life of a bond
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par value
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principal or total amount initially borrowed tht must be repaid to lender at maturity
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currenct yield
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annual interest on a bond diveded by its purchase price
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municipal bonds
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bonds issued by state and local governments
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tax-exempt
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fed. gov. dsnt tax interest paid to investors
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savings bonds
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low-denomination, nontransferable bonds issued by US gov.
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treasury notes
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US gov. obligations w/ maturities of 1-10 years
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treasury bonds
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US gov. bonds tht have maturities ranging frm more than 10 to as many as 30 yrs.
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treasury bill
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short term US gov. obligation w/ a maturity of 13, 26, or 52 weeks and a minimym denomination of $10,000
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individual retirement accounts (IRAs)
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long-term tax-sheltered time deposits tht an employee can set up as part of a retirement plan
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roth IRA
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an IRA whose contributions are made aftr taxes so tht no taxes r takin out at maturity
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capital market
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market where money is loaned for more than 1 yr.
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money market
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market where money is loaned for periods of less than 1 yr.
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primary market
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market where only origional issuer can repurchase or redeem a financial asset
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secondary market
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market in which existing financial assets can be resold to new owners
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equities
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stocks that represent ownership shares in a corporation
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efficient market Hypothesis (EMH)
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argument tht stocks r always priced abt rght & tht bargains r hrd 2find b/c they're followed closely by so many investors
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portfolio diversification
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practice of holding a large # of stocks so thtincreases in some can offset unexpected declines in others
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stockbroker
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person who buys or sells equities
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securities exchanges
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places where buyers and seller meet to trade securities
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seats
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memberships in NY stock Exchange tht allow access to trading floor
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over the counter market
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electronic market place for securities not traded on an organized exchange
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Dow-Jones industrial average
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most popular and widely publicizied measure of stock market performance on NY Stock Exchange
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standard & Poor's 500
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popular measure of stock market performance based on price changes of 500 representative stocks
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bull market
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"strong" market w/ prices of equities moving up for several months or yrs. in a row
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bear market
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"mean" market w/ prices of equities moving sharply dwn for several months or yrs. in a row
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spot market
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market in which transactions r made immediately at prevailing price
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futures contract
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agreement to buy or sell at a specific date in future at a predetermined price
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futures markets
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marketplaces in which future contracts, or futures, are bought and sold
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options
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contracts tht provide right to purchase or sell commodities and/or financial addests @ some point in future at a price agreed upon 2day
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call option
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right to buy a share of stock at a specified price some time in the future
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put option
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right to sell a share of stock at a specified price in the future
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options market
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market in which options are traded
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