ch 11 econ Flashcards
(43 cards)
the network of structures and mechanisms that allows the transfer of money between savers and borrowers
financial systems
a claim on the property or income of a borrower
financial assets
an institution that helps channel funds from savers to borrowers
financial intermediary
an organization that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets
mutual fund
a private investment organization that employs risky strategies that often made huge profits for investors
hedge fund
the strategy of spreading out investments to reduce risk
diversification
a collection of financial assets
portfolio
an investment report that provides information to potential investors
prospectus
the money an investor receives above and beyond the sum of money initially invested
return
the interest rate that a bond issuer will pay to the bondholder
coupon rate
the time at which payment to a bondholder is due
maturity
a bonds stated value, to be paid to the bondholder at maturity
par value
the annual rate of return on a bond if the bond is held to maturity
yield
a low-denomination bond issued by the United States government
savings bond
a bond that protects the investor against inflation by its linkage to an index of inflation
inflation-indexed bond
a bond issued by a state or local government or a municipality to finance a public project
municipal bond
a bond issued by a corporation to help raise money for expansion
corporate bond
a bond with high risk and potentially high yield
junk bond
a market in which money is lent for periods longer than a year
capital market
a market in which money is lent for periods of one year or less
money market
a market for selling financial assets that can be redeemed only by the original holder
primary market
a market for reselling financial assets
secondary market
a portion of stock
share
the difference between the selling price and purchase price that results in a financial gain for the seller
capital gain
