Vocabulary
A network of savers, investors, and financial institutions that work together to transfer savings to investors.
What is a financial system?
A contract to repay borrowed money and interest on the borrowed money at regular future intervals.
What is a bond?
The most common form of investment available. The abbreviation is CDs
What is a certificate of deposit?
A company that sells stock in itself and uses the proceeds to buy stocks and bonds issued by other companies.
What is a mutual fund?
The largest and oldest organized stock exchange in the U.S.
What is the New York Stock Exchange?
A person who buys or sells securities for investors.
What is a stockbroker?
Measure of a bond's return; bond's annual coupon interest divided by purchase price
What is current yield?
Bond that carries an exceptionally high risk of nonpayment and a low rating.
What is a junk bond?
The strategy of holding different investments to protect against risk.
What is portfolio diversification?
The most important and largest OTC.
What is NASDAQ?
Bonds that are issued by state and local governments, often tax-exempt.
What are municipal bonds?
The stated interest on a corporate, municipal, or government bond.
What is a coupon rate?
A low-denomination, non-transferable bond issued by the federal government.
What is a savings bond?
Stocks that represent ownership shares in corporations.
What are equities?
A period during which stock market prices move down for several months or years in a row.
What is a bear market?
Futures contract giving a buyer the right to cancel a contract to buy something.
What is a call option?
The 3 main components of a bond
What is a coupon rate, maturity, and par value?
A U.S. government bond with a maturity of 10 to 30 years.
What is a Treasury bond?
The argument that stocks are always priced about right because they are closely watched. Abbreviated as EMH
What is the Efficient Market Hypothesis?
An indicator that measures stock performance based on 30 representative stocks.
What is Dow Jones Industrial Average (DJIA)?