Show Me the Money
The difference between income and consumption
What is savings?
Accepts the risk of success or failure of a business venture
What is an entrepreneur?
Payment for deferred consumption
What is interest?
An asset pledged by a borrower to a bank when he/she takes a loan
What is collateral?
A claim on the net income and assets of a corporation
What is a share?
A given sum of money received each year for a specific number of years
What is an annuity?
Required for success in any business venture
What is entrepreneurship?
As defined by economists, both the amount earned by productive capital and the amount earned by lending money
What is interest?
The interest rate lenders charge their most trustworthy business borrowers
What is the prime rate?
The first sale of stock of a newly formed company to the public
What is the initial offering?
A payment of a given sum of money each year that continues indefinitely into the future
What is a perpetuity?
A special form of capital that is costly to create but can be reproduced at a low cost
What is intellectual property?
An IOU reflecting a corporation's promise to pay the holder a fixed sum of money at a designated maturity date plus annual interest payments until maturity
What is a bond?
Bring suppliers and demanders together in the market for loanable funds
What are financial intermediaries?
Securities that have already been issued by a corporation
What are secondhand securities?
The procedure of determining the present value of payments to be received in the future
What is discounting?
Help increase the incentives to create new intellectual property
What are patent and copyright systems?
The ________ of a given payment will be lower the further in the future the payment is to be received.
What is "present value"?
The costs of executing a loan agreement, monitoring the loan, and collecting payments
What are administration costs?
Reflect the present value of the discounted stream of expected profit of a corporation
What are share prices?
The reinvested profits of a corporation that help a firm grow
What are retained earnings?
The person who gets as profit the amount left after paying all the resources
What is the residual claimant?
Determined by both the demand for and supply of loanable funds
What is the market interest rate?
Describes the relationship between the interest rate charged and the duration of a loan
What is structure of interest rates?
Most securities traded in the US are _____ securities bought by institutional investors.
What is "secondhand"?