US Economic History
For 138 years, this has been a stock market index of prominent companies listed on stock exchanges in the United States.
What is the Dow or Dow Jones Industrial Average?
It represents a share in the ownership of a company, including a claim on the company's earnings and assets
What is a stock?
It is a marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years and which pays periodic interest payments.
What is a US Treasury bond?
It is a stock launch in which shares of a company are sold to institutional investors and usually also to retail investors. It is typically underwritten by one or more investment banks, who also arrange for the shares to be listed on one or more stock exchanges
What is an IPO?
It assumes borrowing a security whose price you think is going to fall from your brokerage and selling it on the open market. Your plan is to then buy the same stock back later, hopefully for a lower price than you initially sold it for and pocket the difference after repaying the initial loan.
What is a short or short sale?
Governor Peter Stuyvesant called for a 10-foot wall to be built, protecting the lower part of the Dutch Colony peninsula from Native Americans.
How did Wall Street get its name?
A market where new financial instruments are issued and sold directly to investors for the first time.
What is a primary market?
the principal, the coupon rate, and the maturity date
What are the components of a bond?
(1) from early-stage investors;
(2) by reinvesting profits;
(3) by borrowing through banks or bonds; and
(4) by selling stock.
How can businesses raise capital?
It includes an assessment of a borrower's history of paying back, the periodic income from a job and the total value of assts that may be used to back up a loan.
What are the Three C's?
-or-
Information a lender must know of a borrower?
Overinflated shares, growing bank loans, agricultural overproduction, panic selling, stocks purchased on margin, higher interest rates
What factors contributed to the 1929 stock market crash?
It is a distribution of profits by a corporation to its shareholders
What is a dividend?
US Government, Municipalities, International & Emerging Markets & Corporate
What are the types of bonds available to investors?
1) pocket the cash,
2) distribute it to shareholders as dividends, or
3) reinvest it back into the business.
What can business do with itś earned profits?
1) Time without money to consume goods and services
2) Potential Inflation
3) Risk of not being repaid
What must a lender be compensated for?
The California Gold Rush of 1848 and the subsequent migration of people to the West led to many new construction projects and a boom of these transportation stocks for the remainder of the century.
What are the railroads?
A commission a securities dealer charges to execute transactions or provide specialized services on behalf of clients.
What is a broker´s fee?
This refers to the amount of loss an investor is prepared to handle while making an investment decision. Several factors determine the level an investor can afford to take. Understanding this helps investors plan their entire portfolio and will drive how they invest.
What is Risk Tolerance?
Total Revenue - Total costs
What is profit?
It was developed in 1896 by Charles Dow and Edward Jones to give investors insight to how the general level of stock prices were changing. They accomplished this by selecting 30 American companies and placing them in an index that could be analyzed regularly.
What is the Dow Jones Industrial Average?
-or-
The Dow, The DJIA
In 1890, this United States law prescribes the rule of free competition among those engaged in commerce.
What is the Sherman Anti-Trust Act?
It represents transactions between other investors and traders rather than from the companies that issue the securities.
What is a secondary market?
It represents the tradeoff between yield and bond price. When the bond price is lower than the face value, the bond yield is higher than the coupon rate. When the bond price is higher than the face value, the bond yield is lower than the coupon rate.
What is an Inverse Relationship?
They are the owners of a corporation. They receive a share of profits from the business, often in return for an investment of money or labor.
Who are the shareholders?
An investor can theoretically lose this amount of money on a short sale because if the stock price rises instead of falling, there is no upper limit to how much the stock price can increase.
What is unlimited amount/loss?
-or-
limitless