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26 Cards in this Set

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