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40 Cards in this Set
- Front
- Back
investment
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the act of redirecting resources from being consumed today so that they may create benefits in the future; the use of assets to earn income or profit
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financial system
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the system that allows the transfer of money between savers and borrowers
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financial asset
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claim on the property or income of a borrower
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mutual fund
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fund that pools the savings of many individuals and invests this money in a variey of stocks, bonds, and other financial assets
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diversification
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spreading out investments to reduce risk
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portfolio
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a collection of financial assets
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prospectus
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an investment report to potential investors
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return
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the money an investor receives above and beyond the sum of money initially invested.
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credit rist
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borrowers may not pay back the money they have borrowed, or they may be late in making payments
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liquidity risk
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you may not be able to convert the investment back into cash quickly enough for your needs
--cashing in a CD player and having to give up full value |
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inflation rate risk
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inflation rates erode the vale of your assets
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time risk
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you may have to pass up better opportunites for investment
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coupon rate
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the interest rate that a bond issuer will pay to a bondholder
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maturity
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the time at which payment to a bondholder is due
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par value/ face value/ pricipa
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the amount that an investor pays to purchase a bond and that will be repaid to the invesor at maturity
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yield
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the annual rate of return on a bond if the bond were held to maturity
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savings bond
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low-denomination (50-10,000) bond issued by the United States Gov't. bought at half the value
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Treasury Bonds, Bills, and Notes
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U.S. Treasury dep. no longer used
"save and long-term" |
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municipal bonds
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a bond ssued by a state or local gove't or municiaplity to finance "causes" (highways)
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corporate bond
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a bond that a coporation issues to raise money to expand its business.
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securiteis and excahnge commission
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an independent agency of the gov't that regulates financial markets and investment companies.
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junk bond
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lower rate
potentiall higher paying bond |
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Certifiates of deposit
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by bank
low deposit infinite maturity terms |
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Capital market
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money is lent for 1year plus
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money market
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money is lent less than a year
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primary market
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only redeemed by the original holder
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secondary
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stocks can be resold
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share
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portion of stock
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equities
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claims of ownership in a corp.
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OTC market
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an electronic marketplace for stocks and bonds
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Nasdaq
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American market for OTC securites
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futures
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investor may buy/sell on a specific date at the price today.
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options
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investor may sell/ buys shares.
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call option
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buy shares at a specific time in the future
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put option
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sell shares at a specifc time in the future
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bull market
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steady rise in stock market
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bear market
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steady drop in stock market
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the dow
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index that shows how certain stocks have traded.. shows 30 large companies
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S & P 500
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index shows the price changes of 500 stocks
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speculation
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the practive of making high-risk investments with borrowed money in hopes of getting a big return
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