Econ Ch. 11 Review

In order to compare bonds, investors usually compute the bond’s _____ the annual interest divided by the purchase price.

What is the maturity of a bond?

argument that stocks are usually priced correctly & that bargains are hard to find b/c stocks are followed closely

a special type of futures contract that gives the buyer the right to cancel the contract

the right to sell something at a specific future price.

Market in which money is loaned for more than one year.

shares of common stocks that represent ownership of corporations that is available to investors.

Issued by state and local governments and are tax-exempt

§a “mean” or “nasty” market, with the prices of equities falling sharply for several months or years in a row.

It uses the price changes of 500 representative stocks as an indicator of overall market performance

an agreement to buy or sell at a specific future date at a pre-determined price.

What is the coupon rate of a bond?

What is the par value of a bond?

an electronic marketplace for securities that are not traded on an organized exchange such as the NYSE.

existing financial assets can be resold to new owners.

banks and credit unions, life insurance companies, pension funds are all examples of what?

Dollars that become available when people abstain from consumption

practice of holding a large number of different stocks so that increases in some stocks can offset declines in others

The market value of a mutual fund share is called the

a “strong” market with the prices moving up for several months or years in a row

The main implication for the investor is that if all stocks are priced incorrectly,

money is loaned for periods of less than one year

a tax- deferred investment and savings plan that acts as a personal pension fund for employees.

A mutual fund is a company that sells stock in itself to individual investors

the most popular and widely publicized measure of stock market performance

What is a document showing that an investor has made an interest-bearing loan to a bank?

a market where only the original issuer can sell or repurchase a financial asset.

low-denomination non transferable bonds issued by the U.S. government that are also called EE savings

have maturity dates ranging from more than 10 to as many as 30 years.

a place where buyers and sellers meet to trade stocks.

US government obligations with maturities of 2 to 10 years

exceptionally risky bonds

transaction is made immediately at the prevailing price.

What is the absence of spending?

Which of the following is the highest rate of bond?

purchased by investors as long-term investments, but can be quickly sold if investors need cash for other purposes

regular payment intended to provide income security to someone who has worked a certain number of years, reached an age

short-term obligation with a maturity of 4, 13, or 26 weeks.

long-term, tax-sheltered time deposits that can be set up as part of an individual retirement plan.

Financial Systems are made up four parts?

the right to buy something at a specific future price

A person who buys or sells equities for clients, can also open an Internet account with a discount brokerage firm.

For an economic system to grow, it must produce what?