Unit 4 (Ch 10&11)

Front 1

Bear market -

Back 1

a steady drop in stock market over period of time

Front 2

Bull market -

Back 2

a steady rise in stock market over a period of time

Front 3

Investment -

Back 3

the act of redirecting resources from being consumed today so that they may created benefits in the future ;the use of assets to earn an income or profit

Front 4

Money market-

Back 4

market in which is lent for periods less than a year

Front 5

Capital market -

Back 5

market in which money is lent for periods longer than a year

Front 6

Portfolio -

Back 6

a collection of financial assets

Front 7

Prospectus

Back 7

an investment report to potential investors

Front 8

Primary market -

Back 8

market for selling financial assets that can only be redeemed by original holder

Front 9

Secondary market -

Back 9

a market for reselling financial assets

Front 10

Capital gain-

Back 10

the difference between a higher price selling price and lower purchase price , resulting in a financial gain for the seller

Front 11

Capital loss -

Back 11

the difference between a lower price selling price and higher purchase price , resulting in a financial loss for the seller

Front 12

Par value -

Back 12

the amount that an investor pays to purchase a bond and that will be repaid to investors at maturity

Front 13

FDIC ( federal deposit insurance corporation ) -

Back 13

the government agency that insure customers deposit if a bank fails

Front 14

Federal reserve system -

Back 14

the nation central banking system

Front 15

Interest -

Back 15

the price that is paid for the use of borrowed money or money earned by deposited funds

Front 16

Principal -

Back 16

the amount of money borrowed

Front 17

Representative Money -

Back 17

objects that has a value because the holder can exchange them for something else of value (i.o.u)

Front 18

Commodity money-

Back 18

object that have value in themselves as well the used as money

Front 19

Fiat money -

Back 19

money that value became that government has ordered that is acceptable means to pay debts

Front 20

Default -

Back 20

failure to pay back a loan

Front 21

Currency-

Back 21

coin and paper bills used as money

Front 22

Barter system -

Back 22

is an economic system in which two parties trade certain goods or services that each needs to survive

Front 23

Definition of money -

Back 23

money as a medium exchange is anything that is used to determine value during the exchange of goods and services, money as unit of account - money provide means for comparing value of goods and services,money as store as value - money that keep value if you decide to hold on to or store instead spreading it

Front 24

characteristics of currency :

Back 24

PORTABLE: easy to carry
DIVISIBLE: easily broken down into smaller units
UNIFORM: easily counted and measured
LIMITED: (self explanatory)
ACCEPTABLE: everyone in the economy uses it

Front 25

Federalists -

Back 25

believed in a strong central bank

Alexander Hamilton believed in a central bank

Front 26

Anti-federalists -

Back 26

against strong central government
Thomas Jefferson wanted individual states to monitor banking

Front 27

Free banking era - ( 1837- 1864)

Back 27

Bank runs and panic – great numbers of people all tried to take money out at the same time.
Wild cat banks – banks that were chartered under state law, suffered from high rate of failure

Front 28

Greenbacks -

Back 28

paper currency issued the north (union) during the civil war

Front 29

Mortgage -

Back 29

a specific type of loan that is use to buy real estate

Front 30

Bank run -

Back 30

wide spread panic in which great # of people try redeem their paper money

Front 31

How do bank make money?

Back 31

by loaning out money the banks deposit

Front 32

M1:

Back 32

cash , check, debit card

Front 33

M2:

Back 33

saving accounts , mutual funds , cds ( certificate of deposit)

Front 34

Financial intermediary -

Back 34

institution that help channel funds from savers to borrowers

Front 35

diversification -

Back 35

spending out investments to reduce risk

Front 36

bonds -

Back 36

a formal contract to repay borrowed money with interest at fixed intervals

Front 37

Types of bonds :

Back 37

saving bonds - low demotion bond issue by U.S government
municipal bond - bond issued by state or local government or municipality to finance such improvement as highway state building libraries park and school
corporate bond - bond that corporation issue to raise money to expand their business
junk bond - a lower rated potentially higher paying bond

Front 38

Equalities-

Back 38

claims of ownership in a corporation

Front 39

Blue chip stock -

Back 39

Stock of a large, well-established and financially sound company that has operated for many years

Front 40

Dow jones industrial average-

Back 40

(the dow) index that show how certain stock trade

Front 41

Mutual funds -

Back 41

funds that pools the saving of many individuals and invests this money in variety stocks ,bond and financial assets

Front 42

Bonds components:

Back 42

coupon rate - the the interest rate that bond issuer will pay to bondholder
maturity - is time at which payment to bondholder is due
par value - amount that investor pays to purchase a bond that will be repaired to investor at maturity

Front 43

Income stock -

Back 43

this stock pay dividend at regular times during year

Front 44

Growth stock -

Back 44

this stock pays a few or no divided instead the issuing company reinvest its earning in its business the business( and its stock) increase in value over time

Front 45

Where are most stocks traded ?

Back 45

THE NEW YORK STOCK EXCHANGE