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Economics > Quiz 6 > Flashcards

Quiz 6 Flashcards

(60 cards)

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1
Q

What is not a financial asset ?

A

Financial Intermediaries

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2
Q

What is the main difference between a Finance Company and a Bank ?

A

A Finance Company doesn’t have savings accounts

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3
Q

The main purpose of Life insurance is to provide financial protection for the family or other beneficiary of the uninsured

A

True

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4
Q

A Pension is guaranteed, no matter what job you work in, if you work at least 20 years

A

False

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5
Q

Define diversification

A

Splitting among different investments

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6
Q

Mutual funds

A

Pool the money of investors together and invest in different assets

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7
Q

Define Liquidity

A

Money in a account turns into cash

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8
Q

Complete the sentence: the higher the risk

A

The higher the potential reward

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9
Q

Example of financial intermediary

A

Mutual funds

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10
Q

Your book mentions four types of risk. Name one

A

Credit risk

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11
Q

My Maddox believes Blockchain might be better long-term investment than cryptocurrency. Why does he feel this way ?

A

Cryptocurrency can disappear one day

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12
Q

Blockchain

A

Way it encrypts the currency

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13
Q

Cryptocurrency

A

A form of digital currency

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14
Q

What does cryptocurrency use ?

A

Cryptography

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15
Q

Cryptography

A

Art of writing and solving codes

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16
Q

Consumerism

A

The protection or promotion of the interest of consumers

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17
Q

What are we suppose to do in stock ?

A

Buy low sell high

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18
Q

Financial intermediaries

A

Institution that helps channel funds from savers to borrowers

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19
Q

Financial intermediaries include

A 
Banks, savings and loan associations, and credit unions 
Finance companies 
Mutual funds 
Life insurance companies 
Pension funds
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20
Q

Parts of a check

A 
Routing number 
Account number 
Check number
Memo line 
Sign line 
Pay to line
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21
Q

Endorsing

A

Signing of a check

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22
Q

What happens when the bank gets your name wrong on the check ?

A

You can still sign it off since the bank made the mistake

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23
Q

Assets

A

Something you own that has value

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24
Q

FDIC

A

Funds that are protected by the government

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25
Finance company
Make a loan to consumers and small business
26
Principal in deposit
The amount of money you deposit
27
Stock broker
Buys part of the company Stock Options Commodities
28
Capital
Money
29
Issue corporate bond
Government issue bonds
30
Privately own
Own it yourself
31
Publicly trade company
Anyone in public can own it
32
Unrealized gain/loss
Until you sell or buy
33
``` Mutual funds (Another def) ```
A way to invest in the stock market with automatic diversification
34
4 types of risk
Credit risk Liquidity Inflation Time
35
Credit risk
Risk a chance a default on your loan | - don't co-sign a loan
36
Liquidity
If you need the money, you may not get it when needed
37
Inflation
``` #1 risk of money Your money won't keep up with inflation ```
38
Time
Your money can be tied up and you can't use it
39
What the most active account ?
Your checking
40
How do you take money out of a checking account ?
ATM Check ACH Debit Visa card
41
Emergency savings
#1 thing to keep you out of bankruptcy Have 3-6 month living savings Have around 6,000-12,000
42
Regular savings
1,000 | Best to have all along with emergency saving
43
Money market
Mutual funds invest in T-bills
44
What can't savings account keep up with ?
Inflation
45
Bond
Loan | Borrowing money
46
Who issues bonds ?
Government | Companies
47
S.E.C
Securities Exchange Commission | over sees corp bond
48
Corp bond
Corp issue bonds to help raise money
49
Two types of bond ratings
Moody's | S and P
50
Difference between AAA rating and a D rating
AAA- smaller risk Small interest rate D- higher risk High interest rate
51
What happens when a individual buys a bond ?
They are given money to a business or government
52
Creditor priority
``` IRS Bond holders Banks secured collateral A/P Employees ```
53
Stock Manipulation
Purposely influence the price of the stock (up or down)
54
Coupon Rate
The interest rate that a bond issuer will pay to a bond holder
55
When you buy a bond from Vegas, who is the issuer and the bondholder ?
Bond issuer is Vegas | Bondholder is you
56
Issuer
Borrower | Gets money upfront
57
Bondholder
Loaner | Gives the money
58
Maturity
The time at which payment to a bondholder is due | typically 10, 20, or 30 years
59
Par value
The amount that an investor pays to purchase a bond and that will be repaid to the investor at maturity
60
Creditors
Anyone in the business you own money to

Economics (10 decks)

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