stocks & bonds

what type of market is the stock market

secondary

how is stock sold

as individual shares

what type of businesses sell shares?

public compaines

what do shares represent?

ownership

what do shareholders vote for?

the board of directors

how can stock be categorized?

whether or not they give shareholders secondary rights

what is common stock?

gives shareholders ownership, but not voting rights

what is preferred stock?

gives shareholders ownership,, but not voting rights however they do get preferential treatment

what is the term for when a private company goes public?

going public

what is an IPO

initial public offering

when are IPO's used?

when a private, going public company issues them

why do private companies go public?

to expand, give limited liability to the owners

what is SEC?

securities & exchange commission

what is a disadvantage to going public?

loss of control for og owners

what is NYSE?

New york stock exchange

what is NASDAQ?

a prominent stock exchange

where is the NYSE located?

wall street, New York

how is stock sold in NYSE

sold via auction

what type of companies are on NASDAQ?

modern technology companies

what is the Dow

stock index

what does the dow track?

30 blue chip companies

what is the S & P 500

standard & poor 500

what is a bull market

a time when stock prices are rising

what is a bear market

when stock prices are steadily falling

what are capital gains?

selling shares at a higher price than you bought them

what are growth stocks?

buy high sell higher

what are dividends

a share of a corporation's profits that are paid back to the corporation's shareholders

what do dividends equal?

income stock

52-week range

lowest & highest prices for the past 12 months

why would the 52- week range be used

to understand a certain stock price trend

yield

% relation between stocks current price & dividend

what happens after a stock split

share prices start increasing, bc of the lower price

what are mutual funds

professionally managed investments that pool $ from many investors to purchase

how do issuers make money on credit cards

by charging interest on loans & charging feeds such as for late payments

what is APR

annual percentage rate your interst rate

what is different between APRs

different types of borrowing

what are the cons of credit cards

high balance, paying interest, missing payments

what are the pros of credit cards

responsbility, pay for things without cash, convenient, rewards

what happens if you buy a credit card at 18-21

must show proof of income

what do credit cards do

all you to borrow money you don't have and build credit

what do debit cards do

allow you to only access the money you already have in your account

who can raise money for investment

governments and corporations

what are bonds

loans

what do bonds represent

debt

what does stock represent

debt in corporations

what is the coupon rate

the interest rate to be paid to the bondholder

what is the maturity

the time at which payment to the bondholder is due

what is the par value

the amount the investor pays for the bond

who issues saving bonds

the federal government

who are saving bonds given to

gifts for young people

what are saving bonds risk free

government's ability to tax/raise money

who issue municipal bonds

state and local govenrmetns

what are municipal bonds used for

to finance projects

what type of investments are munis

safe

why are munis popular bonds

they have tangible local benefits, and not taxed at federal and state level

who issues corporate bonds

businesses

what type of interest is paid on corporate bonds

higher because of the moderate level of risk

what are junk bonds

low rated high risked bonds issued by ogv or corporations

what do financial intermediaries do

bring savers and borrowers together by taking deposits from savers and providing loans to individuals and busiensses

examples of finaincial intermediaries

commercial bank and credit union

what are commerical banks

profit driven private institutions providing a wide range of services, such as checking/ savings accoutns

what are credit unions

service oriented cooperative providing similar functions as banks but generally offer higher interest rates on deposits

fractional reserve banking

depositing money in an intermediary

relationship between risk and reward

High risk, high reward

Low risk, low reward

bank intermediaries

very safe and have limited return

liquidity

the ease with which an assest can be turned into cash

what are savings accounts

generally very safe place to put money and offer high liquididty

what are CDs

fixed terms and offer higher interest rates

what are money market accounts

offer a combo of the pros and consn of both savigs and CDs

what are t bills, t notes, and treasury bonds

are issued by us treasury dept and like savings bonds, they are very low risk backed by full faith and credit

when do t bills reach maturity

3,6,12 months

when do t notes reach maturity

2-10 years

when do treasury bonds reach maturity

10-30 years