Chapter 11 Vocab Flashcards
(43 cards)
The act of redirecting resources from being consumed today so that they may create benefits in the future. The use of assets to earn income or profit
Investment
The system that allows the transfer of money between savers and borrowers
Financial system
Claim on the property or income of a borrower
Financial asset
Institution that helps channel funds from savers to borrowers
Financial intermediary
Fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets
Mutual fund
Spreading out investments to reduce risk
Diversification
A collection of financial assets
Portfolio
An investment report 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 a bond holder
Coupon rate
The time at which payment to a bondholder is due
Maturity
The amount that an investor pays to purchase a bond and that will be repaid to the investor at maturity
Par value
The annual rate of return on a bond if the bond were held to maturity
Yield
Low denomination bond issued by the United States government
Savings bond
A bond issued by a state or local government or municipality to finance such improvements as highways, state buildings, libraries, parks, and schools
Municipal bond
A bond that a corporation issued to raise money to expand its business
Corporate bond
An independent agency of the government that regulates financial markets and investment companies
Securities and exchange commission
A lower rated potentially higher paying bond
Junk bond
Market in which money is lent for periods longer than a year
Capital market
Market in which money is lent for less than a year
Money market
Market for selling financial assets that can only be redeemed by the original holder
Primary market
Market for reselling financial assets
Secondary market
Portion of stock
Share
Claims of ownership in a corporation
Equities
