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45 Cards in this Set
- Front
- Back
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investment
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act of redirecting resources from being consumed todya 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 allos the transfer of money between savers and borrowers
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financial assets
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claim on the property or income of a borrower
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financial intermediary
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institution that helps channel funds from savers to borrowers
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mutual fund
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fund that pools the savings of many individuals and invests this money in a variety 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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pension
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set up by employers to collect deposits and distribute to retirees
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finance companies
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make loans to consumers and small businesses and charge borrowers higher fees and interest rates to cover possible losses
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coupon rate
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the interest rate that a bond issuer will pay to a bonholder
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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
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the amount that an investor pays to purchase a bond and that will be repaid to the investor at maturity
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yeild
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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 bond issued by the united states government
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municipal bond
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a bond issued by a state or local governmt or municipality to finance suh improvemnets as highways, state buildings, libraries, parks and schools
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corporate bond
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a bond that a corporation issues to raise money to expand its business
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securities and exchange commission
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an independent agency of the governement that regulates financial markets and investment companies
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junk bond
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a lower-rated, potentially highter-paying bond
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capital market
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market in which money is lent for periods longer than a year
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money market
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market in which money is lent for periods of less than a year
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primary market
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market for selling financial assets that can only be redeemed by the original holder
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secondary market
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market for reselling financial assets
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3 components of bonds
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coupon rate, maturity, and par value
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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 corporation
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capital gain
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the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the seller
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capital loss
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the differnce between a lower selling proce and a highter purchase price resulting in a afinacial loss to the seller
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stock split
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the division of a single share of stock into more than one share
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stockbroker
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a person who links buyers and sellers of stock
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brokerage firm
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a business that specializes in trading stocks
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stock exchange
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a market for buying and selling stock
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Nasdaq
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american market for OTC securities
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OTC market
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an electronic marketplace fro stocks and bonds
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futures
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contracts to buy or sell at a specific date in the future at a price specified today
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options
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contracts that give investors the choice to buy of sell stock and other financial assets
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call option
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the option to buy shares of stock at a specified time in the future
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put option
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the option o sell shares of stock at a specified time in the future
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bull market
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a steady rise in the stock market over a period of time
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bear market
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a steady drop in the stock market over a period of time
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the dow
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index that shows how vertain stocks have traded
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S &P 500
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index that shows the price changes of 500 different stocks
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Great Crash
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the collapse of the stock market in 1929
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speculation
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the practice of making high-risk investments with borrowed money in hopes of getting a big return
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