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26 Cards in this Set
- Front
- Back
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What are the three main characteristics of bonds?
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It has a coupon, maturity, and par value.
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What are the four markets of financial assets?
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Capita Markets.
Money Markets. Primary Markets. Secondary Markets. |
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What do most investment advisors tell people?
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To invest consistently over time.
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Why do analysts advise people to invest in what they know?
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Because investments are complicated and knowing a few fundamentals can help you make better choices.
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How do people contribute to a 401(k) plan?
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Through payroll deductions.
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What are bonds?
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Lng-term obligations that pay a standard rate of interest for a specified # of years.
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What two factors do investors consider before they decide what to offer for a bond?
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Change in future intrest rates.
The risk that the company will default. |
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What is the major significance of the seconday market?
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The liquidity it provides to investors.
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Risk
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A situation in which the outcome is not certain, but the probabilities for each possible outcome can be estimated.
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401(k) Plan
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a tax defrred investment and saving plan that acts as a personal pension fund for employees.
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Coupon
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The stated interest on the debt.
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Maturity
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The life of the bond (how long the loan is good for before it must be paid up).
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Par Value
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The principal or the total amount initially borrowed that must be repaid to the lender at maturity.
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Current yield
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the annual interest divided by the 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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The federal government does not tax the interest paid to investors.
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Savings Bonds
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Low-denomination, nontransferable bonds issued by the U.S. government, usually through payroll savings plans.
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Treasury Notes
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U.S. government obligations with maturities of two to 10 years.
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Treasury Bonds
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Bonds that have maturities ranging from more than 10 to as many as 30 years.
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Treasury Bills
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A short-term obligation with a maturity of 13, 26, or 52 weeks and a minimum denomination of $10,000.
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Individual Retirement Accounts (IRAs)
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Long-term, tax-sheltered time deposits that 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 after taxes so that no taxes are taken out at maturity.
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Capital market
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A market where money is loaned for more than one year.
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Money Market
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A market where money is loaned for periods of less than one year.
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Primary Market
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A market where only the original issuer can repurchase or redeem a financial asset.
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Secondary Market
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A market in which existing financial assests can be resold to new owners.
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