Studied by 7 peoplemoney
anything that serves as a medium of exchange, a unit of account, and a store of value
fiat money
objects that have value because a government has decreed that they are an acceptable means to pay debts
store of value
Something that keeps its value if stored rather than spent
currency
coins and paper bills used as money
commodity money
objects that have value in and of themselves and that are also used as money
representative money
objects that have value because the holder can exchange them for something else of value
specie
coined money, usually gold or silver, used to back paper money
barter
the direct exchange of one set of g/s for another
unit of account
a means for comparing the values of g/s
medium of exchange
anything that is used to determine value during the exchange of g/s
investment
the act of redirecting resources from being consumed today so that they may create benefits in the future
financial system
the network of structures and mechanisms that allows the transfer of money between savers and borrowers
financial asset
a claim on the property or income of a borrower
financial intermediary
an institution that helps channel funds from savers to borrowers
mutual fund
an organization that pools the saving of many individuals and invests this money in a variety of stocks, bonds, and other financial assets.
hedge fund
a private investment organization that employs risky strategies to try and make huge profits for investors
diversification
the stratey of spreading out investments to reduce risk
portfolio
a collection of financial assets
prospectus
an investment report that provides info to potential investors
return
the money an investor receives above and beyond the sum of money initially invested
coupon rate
the interest rate that a bond issuer will pay to the bondholder
maturity
the time at which payment to a bondholder is due
par value
a bond’s stated value, to be paid to the bondholder at maturity
yield
the annual rate of return on a bond if the bond is held to maturity
savings bond
a low-denomination bond issued by the US govt
inflation-indexed bond
a bond that protects the investor against inflation by its linage to an index of inflation
municipal bond
a bond issued by a state or local government or a municipality to finance a public project
corporate bond
a bond issued by a corporation to help raise money for an expansion
junk bond
a bond with high risk and potentially high yield
capital market
a market in which money is lent for periods longer than a year
money market
a market where money is let for periods of a year or less
primary market
a market for selling financial assets that can be redeemed only by the original holder
secondary market
a market for reselling financial assets
share
a portion of stock
capital gain
the difference between the selling price and the purchase price that results in a financial gain for the seller
capital loss
the difference between the selling and purchase price that results in a financial loss for the seller
stock split
the division of each single share of a company’s stock into more than one share
stockbroker
a person who links buyers and sellers of stock
brokerage firm
a business that specializes in trading stocks
stock exchange
a market for buying and selling stock
futures
contracts to buy or sell commodities at a particular date in the future at a price specified today
options
contracts that give investors the right to buy or sell stock and other financial assets at a particular price until a specified future date
call option
a contract for buying stock at a particular price until a specified future date
put option
a contract for selling stock at a particular price until a specified future date
bull market
a steady rise in the stock market over a period of time
bear market
a steady drop or stagnation in the stock market over a period of time
speculation
the practice of making high-risk investments with borrowed money in the hopes of getting a big return
money supply
all the money available in the US economy
liquidity
the ability to be used as, or directly converted into, cash
demand deposit
money in a checking account that can be paid out “on demand” or at any time
money market mutual fund
a fund that pools money from small savers to purchase short-term gov’t and corporate securities
fractional reserve banking
a banking system that keeps only a fraction of its funds on hand and lends out the remainder
default
failing to pay back a loan
mortgage
a specific type of loan that is used to buy real estate
credit card
a card entitling its owner to buy g/s based on the owners promise to pay for those g/s
interest
the price paid for the use of borrowed money
principal
the amount of money borrowed
debit card
a card used to withdraw money from a bank account
creditor
a person/institution to whom money is owed.
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