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66 Cards in this Set
- Front
- Back
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securities markets
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financial market places for stock and bonds. assist business in finding long term funding to finance capital needs. divided into primary and secondary markets
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primary markets
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handle the sales of securities. corporations make money on the sale of their securities (stock) only once.
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secondary market
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handles the trading of these securities between investors, with the proceeds of sale going to the investor selling the stock, not to the corporation whose stock is sold.
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investment bankers
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specialists who assist in the issue and sale of new securities
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underwrite
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investment banking firms buys the entire stock or bond issue at an agreed on discount, which can be quite sizable, and then sells the issue to private of institutional investors at full price.
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institutional investors
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large organizations, such as pension/ mutual funds and insurance companies, that invest their own funds or the funds of others
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stock exchange
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an organization whose members can buy and sell securities of companies and individual investors
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over the counter market
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exchange that provides a means to trade stocks not listed on the national exchanges
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NASDAQ
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nation wide electronic system that links dealers across the nation so they can buy and sell securities electronically
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securities and exchange commission
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federal agency that has a responsiblity for regulating the various stock exchanges. created by the securities and exchange act of 1934
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prospectus
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a condensed version of economic and financial information that a company must file with the SEC before issuing stock; the prospectus must be sent to the prospective investors
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insider trading
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using knowledge or information that individuals gain through their position that allows them to benefit unfairly from fluctuations in security prices
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insider
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includes just about anyone with securities information not available to the general public
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stocks
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shared ownership in the company
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stock certified
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evidence of stock ownership that specifies the name of the company, the number of shares it represents, and the type of stock being issued
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per value
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dollar amount assigned to each share of stock by the corporation's charter
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no par stock
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most companies issue it
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dividends
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part of a firm's profits that hte firm may distribute to stockholders as either cash payments or additional shares of stock. generally paid quarterly
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common stock
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the most basic form of ownership in a firm. it confers voting rights and the right to share in the firm's profits through dividends (if approved by directors)
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preemptive right
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common stockholders have it, to purchase new shares of common stock before anyone else
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preferred stock
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stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold. can be turned into common but not vise versa.
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callable
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preferred stock holders could be required to sell their shares back to the corporation
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cumulative
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if one or more dividends are not paid when promised ,they accumulate and the corporation must pay them later before it can distribute any common stock dividends.
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bond
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corporate certified indicting that person has lent money to a firm or government. usually issued in units of 1,000 dollar.s
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principal
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face value of a bond, which the issuing company is legally bound to repay in full to the bond holder on the maturity date
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maturity date
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the exact date the issuer of a bond must pay the principal to the bondholder
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coupon rate
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a term that dates back to when bonds were issued as bearer bonds
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interest
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the payment the issuer of a bond makes to the bondholders for the use of borrowed money
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debenture bonds
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bonds that are unsecured bonds
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sinking fund
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a reserve account in which the issuer of a bond periodically reitres some part of the bond principal prior to the maturity so that enough capital will be accumulated by the maturity date to pay off the bon
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retire
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set aside, firms do this so that enough funds will accumulate by the maturity date to pay off the bond
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callable bond
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permits the bond issuer to pay off the principal before its maturity date
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convertible bonds
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investors can convert these into shares of common stock in issuing company
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stock broker
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a registered representative who works as a market intermediary to buy and sell securities for clients
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investment risk
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the chance that an investment will be worth less at some future time than its worth now
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yield
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the expected rate of return on an investment, such as interest or dividends, usually over a period of one year
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duration
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the length of time your money is committed to an investment
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liquidity
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how quickly you can get back your invested funds if you want or need them
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tax consequences
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how the investment will affect your tax situation
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growth
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choosing stocks you believe will increase in price
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income
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choosing stocks that pay consistent dividends
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diversification
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buying several different investment alternatives to spread the risk of investing. portfolio strategy or allocation model
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bulls
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believe that stock prices are going to rise. they buy stock i anticipation of increase
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bears
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expect stock prices to decline and sell their stocks in anticipation of falling prices
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capital gains
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the positive difference between the purchase prices of a stock and its sale price.
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blue chip stocks
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they pay regular dividends and generally experience consistent stock prices appreciation.
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growth stocks
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earnings are expected to grow at a faster rate than other stocks
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income stocks
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stocks of public utilizes are considered this because they usually offer investors a higher dividend yield that generally keeps pace with inflation.
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penny stocks
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representing ownership in companies that compote in high risk industries
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market order
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tells a broker to buy or sell a stock immediately at best price
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limit order
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tells broker to buy or sell stock at a specific price
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stock splits
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an action by a company that gives stockholders two or more shares of stock for each one they own
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buying stock on margin
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purchasing stocks by borrowing some of the purchase cost form the brokerage firm
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premium
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price above its face value
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as interest rates go up, ___
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bonds prices fall and vice versa
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junk bonds
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high risk, high interest bonds
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mutual fund
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an organization that buys stock and bonds and then sells shares in those securities to the public
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index funds
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invest in a certain kind of stock or bonds or market as a whole
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load fund
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charges investors a commission to buy or sell its shares
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no load fund
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charges no commission
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open end funds
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mutual funds that will accept the investments of any interested investors
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closed end funds
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limit the number of shares
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exchange traded funds
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collections of stocks and bonds that are traded on exchanges but are traded mor like individual stocks than like mutual funds. can be purchased or sold at any time during the trading day
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dow jones industrial average
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the dow, the average cost of 30 selected industrial stocks, used to give an indiction of direction up or down of the stock market over time
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program trading
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giving instructions to computers to automatically sell if the price of a stock dips to a certain point to avoid potential losses
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curbs and circuit breakers
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restrict program trading whenever the market moves up or down by a large number of points in trading day. circuit breakers are more drastic than curbs.
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