Money
What is the Gold Standard?
A monetary system in which paper money and coins had the value of certain amounts of gold.
Distinguish between the opposing viewpoints of Alexander Hamilton and Thomas Jefferson regarding the existence of a national bank.
Alexander Hamilton - Federalist, In favor of a national bank, Emphasized the importance of promoting industry and trade,
Thomas Jefferson - Anti-federalist, Against a national bank, Feared that the wealthy would gain control of the bank and use its resources to increase their power
What are the two main jobs of the Federal Reserve?
Regulate Banks
Regulate the Economy
On a Bond the Coupon rate is...
The interest rate that a bond issuer will pay to the bondholder.
A type of stock in which Investors are usually voting owners of the company.
Common Stock
What makes the dollar so valuable?
Confidence
Bank runs, Wildcat banking, Fraud, and the issuing of many different currencies were all examples of banking during which period?
The Free Banking Era
Contrast Expansionary Monetary Policy and Contractionary Monetary Policy
Expansionary Monetary Policy - Lowering interest rates in order to speed up the economy, Promotes competition
Contractionary Monetary Policy - raises interest rates in order to slow down the economy, Reduces competitio
The Maturity of a bond refers to what?
The time at which payment to the bondholder is due.
A type of stock in which investors are usually nonvoting owners of the company.
Preferred Stock
Why are lenders willing to lend cash to borrowers?
Interest - Lenders can charge a fee on the money borrowed, and make money.
What is liquidity?
money with the ability to be used as, or directly converted into cash
Monetary policy is defined as…
actions that the Fed takes to influence the level of real GDP and the rate of inflation in the economy.
The Par Value of a bond relates to what?
Assigned by the issuer, is the amount to be paid to the bondholder at maturity.
Contrast the difference between bull and bear markets
Bull Market - When stock prices in general steadily rise for a period of time
Bear Market - when stock prices steadily fall or stagnate for a period of time.
Identify the three main ways monetary exchange takes place with the correct description.
Banks, Bond Market, Stock Market
What is Interest?
the price paid for the use of borrowed money.
Reserve funds are defined as...
cash minimums that financial institutions must have on hand in order to meet central bank requirements.
Bonds with a fairly high risk of default but a potentially high yield
Junk Bonds
Identify two organizations that measure of how well the Stock Market is doing?
The DOW and the S&P 500
Identify the difference between debt and equity.
Debt - a set amount of money plus interest that you have promised to pay back.
Equity - The difference between the value of the assets/interest and the cost of the liabilities of something owned.
What is principle
The actual amount borrowed in a loan.
Name a major negative consequence of quantitative easing.
Inflation
Identify the 4 types of Financial intermediaries
Mutual Funds, Hedge Funds, Life Insurance Policies, and Pension Funds
This is usually paid four times per year
Dividends
What is a financial institution?
An establishment that conducts financial transactions such as investments, loans, and deposits.
Money Supply can be defined as...
All the money available in the United States economy.
The 4 Main ways that the FED can change the money supply are...
Fractional Reserve Banking
The Discount Rate
Open Market Operations
Quantitative Easing
Corporate and Municipal are two types of bonds, which one of these is tax exempt, and which one is not.
Corporate Bonds are not tax exempt
Municipal Bonds are tax exempt
The idea that “it is not wise to put all of your eggs in one basket," is labeled what?
Diversification