Economics Saving and Investing Vocab
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22 Terms
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financial asset
something you own that has financial value(cash, stock, CD)
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liquidity
the ease with which you can turn an asset into cash
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return
the money an investor receives above and beyond the sum of money initially invested. Interest earned on investment
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investment
redirecting resources from being consumed today so that they may create benefits in the future
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financial system
the network of structures and mechanisms that allows the transfer of money between savers and borrowers
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financial intermediary
and institution that helps channel funds from savers to borrowers (i.e. banks)
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mutual fund
an organization that pools money of many individuals and invests this money in a variety of stocks, bonds, and other financial assets
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hedge fund
a private investment organization that employs risky strategies to try to make huge profits for investors
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diversification
the strategy of spreading out investments among a variety of financial assets in order to reduce risk
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portfolio
a collection of financial assets
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prospectus
an investment report that provides information to potential investors
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share
a portion of stock
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capital gain
the difference between the selling price and purchase price that results in a financial gain for the seller
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capital loss
the difference between the selling price and purchase price that results in a financial loss for the seller
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stock split
the division of each single share of a company’s stock into more than one share
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dividend
a sum of money paid regularly by a company to its shareholders out of its profits
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stockbroker
a person who links buyers and sellers of stock
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brokerage firm
a business that specializes in trading stocks
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stock exchange
a market for buying and selling stock
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bull market
a steady rise in the stock market over a period of time
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bear market
a steady drop or stagnation in the stock market over a period of time
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sector
the stock market is divided into 11 major sectors representing key areas of the economy (i.e. financial, consumer goods, technology)