Saving & Investing
the act of redirecting resources from being consumed today so that they may create benefits in the future.
list three components of bonds.
Coupon Rate the
Maturity
Par value
Concept: bull markets
a steady rise in the stock markets
Medium of Exchange
Unit of Account
Store of Value
Describe characteristic of M2 assets
Describe the main benefit of diversification
failing on a single investment and lose all the fund
Concept: par value
the amount to be paid to the bondholder at maturity.
Concept: Stockbroker
a person who links buyers and sellers of stock
Concept: Representative Money
Describe M1
have liquidity, can be directly used as or convert to cash.
Describe the propose of prospectus.
Warns the investors the possible changes that will hurt them
List 2 advantages of bonds for the issuer.
the coupon rate of a bond will not change after sold
the company doesn't need to share the profit with bond owner
What is the concept of a person sold his bond at a lower price than he purchases
Capital loss
Concept: commodity money
Objects that have value in and of themselves and that are also used as money.
Concept: Gold Standard
A monetary system which paper money and coins had the value of certain amount of gold.
Concept: Return
the money an investor receives above and beyong the sum of money initially invested.
The advantage of the inflation-indexed bond.
the par value will changes the same as the index changes.
identify 2 major types of stock exchange in the United States
The New York Stock Exchange & Nasdaq
What makes Fiat Money "Fiat"?
The government has decreed that they are acceptable means to pay debt/the Government's orders
Describe the things done by the government in the banking system during the Civil war era.
Create greenbacks as currency
Reform the banking system to let the federal government to charter banks
Adopted Gold Stand
Differences between Mutual fund and hedge fund.
Mutual: save money in different places, less risky.
Hedge: risky strstegies makes big, very risky
What financial assets are traded on the money market?
Short-term CDs treasury bills and money market funds.
How the speculation causes in the Great Crash in 1929?
it made many people lose all their money.
Why money served as a good store of value?
It keeps its value if it is stored rather than spent
Describe the two views of banking.
Hamilton(Federalist)'s National bank -that chartered by the federal government.
Antifederalists' decentralized system - state will regulate all banks within their borders