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45 Cards in this Set

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  • Back
What does the supply curve look like?
Y= price; x=quantity slopes UP from left to right
Describe the demand curve
y=price, x=quantity and slopes DOWN from left to right
What is price elasticity
Responsiveness of the quantity of good demanded to changes in the price. Demands for necessities are inelastic.
What would cause an upward shift in the demand curve
Increase in demand for capital goods; increase in disposable income
What would cause an downward shift in the demand curve
increase in savings, and interest rates.
What is GDP
Gross domestic product=total market value of all goods and services produced domestically
What is GNP?
Gross national product=market value of all goods and services produced by US resideents. Unlike GDP which defines production by location, GNP defines it by ownership.
What are the three major tools of monetary policy used by the Fed?
BEST=buy easy, sell tight=lower or increasing reserves; raising or lowering discount rate; buying and selling of gov securities;
What is the federal funds rate
interest rate charged on short term borrowing between banks. Fed targets this rate in all of its interest rate decisions, but DOES NOT directly control it.
What is the prime rate?
rate charged by commercial banks to its best business and personal customers. It Is directly set by bank.
What is the discount rate?
Thei is the only rate the the feds control and is the rate banks can borrow money from feds.
What are the two tools Congress uses to exercise fiscal policy
Taxes and spending
The federal funds rates will tend to move up under which of the following conditions
A. fed reserve is buying government securities
b. fed reserve lowers the discount rate
c. a few banks have excess reserve and the rest has ample reserves
d. a few banks have ample and the rest has significant reserve deficiencies
D. using the law of supply and demand.
How does the fed target the fed funds rate?
The fed's target funds rate is actually a range of rates. Rates change daily . The regional banks can influence the day to day fed funds rate within the target by adjusting the discount rate, which is the interest rate the fed charges when it loans to member banks.
What are the four economic business cycles
Expansion, Peak, trough, contraction
What factors increase during an economic expansion?
income, demand, sentiment, consumer credit, retail sales, auto sales, mortgage debt, housing starts. Factors inversely related to contraction.
What factors increase during an economic contraction?
inflation, unemployment and CPI. Factors inversely related to expansion.
What factors decrease during an economic peak?
labor productivity and efficiency
What factors increase during an economic trough?
labor productivity and efficiency
What is a leading economic indicator and what are some examples of them?
Indicators are those that tend to precede (forecast) actual economic change. Examples are housing starts; new claims for unemployment; bond yields; orders for durable goods and changes in investor sentiment
What are coincident indicators and what are some examples of them?
Coincident indicators occur simultaneously during the business cycle and confirm the stage that the economy is currently experien cing., They mirror the performance of the economy. Examples include unemployment rate, industrial production, personal income and corporate profits
What are lagging indicators and what are some examples of them?
Lagging indicatotrs are those that usually change after the economy has passed through a business cycle and is in another. Examples are prime rate of interest, CPI change, outstanding loans, average duration of unemployment
What is Chapter 13 bankruptcy
Involves the adjustment of debts of an individual with regular income.
What is Chapter 7 bankruptcy?
Historically the most popular type. Limited to unsecured loans and ones not secured by house or other asset. However since 2005 has been severely restricted. Permits debtor to claim exemptions on home, retirement, life insurance and annuity contracts, pensions but no exemptions on student and gov loans, childsupport or alimony and income taxes.
What is Chapter 11 bankruptcy
Anyone eligible for Chapt 7 is also eligible for chapter 11 (reorganization).
What is the Consumer Credit Protection Act
AKA Truth in Lending Act-requires lenders to disclose finance charges and APR and other terms of loan b4 lending.
What is the Fair Credit Billing Act
Requires consumers to notify creditors of billing errors within 60 days.
What is the Consumer Credit Reporting Reform Act?
requires credit bureau reports to include accurate, relevant info
What is the Equal credit opportunity act
prohibits credit discrimination
What is theFair Debt Collection Practices Act
prohibits debt collectors fromengaging in certain practices
What is the Dow Jones
Index of 30 stocks. numerator is 30 but denomerator is less than one. Problems: does not reflect cash dividends less than 10%. Consist of a biased sample of market. However highly correlateed to other market indexes 95^
What is the SP500
benchmark for large caps. determined by base year value multiplied by 10. automatically adjusts for splits and dividends
What is the Russell 2000
a subset of russell3000. small cap benchmark. market capitalization weighted
What is russell 3000
benchmark--majority of us equities
What is EAFE
Europe, australasia and far east
What is a broad market index for us headquartered securities
Wilshire 5000
What index is used for bonds
JP Morgan index
What is the difference between a market average and a market index
an INDEX measures current price behavior. Market averages reflects average price nbehavior
Explain underwriting terms firm commitment, standby, best efforts and private placement
firm commitment-underwriter purchases entire issue and assumes all risk
Standay- securities remaining after IPO
Best efforts--no risk to underwriter-used when issuer is confident in selling all securities
private placement-no registration required, cheaper, underwriters help find investors, limited to 35 unaccredited investors
What is shelf registration
company registers security sale with sec and has 2 years to sell (put on shelf)
what are four roles on NYSE
on NYSE-commisioned broker, floor broker, registered trader or floor trader. Specialist has 25% in one or more stocks, can act as dealer
What is OTC
Third market. broker via phone and computer. Market markers are brokers w/OTC that specialize
What does the size of the spread depend on
Quantity of market makers. Inversely related to trading volume
What are two names of foreign market xchange
ISE internation stock exchange and TSE Tokyo stock exchange
What is an ETF
Xchange traded funds--investment portfolio. have lower expenses than mtual funds. passively managed, usually inddex or regional. Not traded at NAV S/h may request in kind redemption. Taxed when entire amount sold