The Dot-Com Bubble and Securities Fraud

This set of flashcards covers critical vocabulary related to the Dot-Com Bubble, securities fraud, financial markets, and their historical context.

Dot-Com Bubble

A period of excessive speculation in internet-related companies that led to a market crash in the early 2000s.

Securities Fraud

Illegal activities that deceive investors regarding the value or integrity of investment products.

Financialization

The process by which financial motives, financial markets, and financial actors gain greater influence over economic policy and economic outcomes.

Equity

Ownership rights in a firm or industry, often yielding control over the investment target.

Debt

Financial instruments representing borrowed funds that must be repaid, often with interest.

Pump-and-Dump Scheme

A fraudulent scheme that involves artificially inflating the price of a stock in order to sell it at a profit.

Initial Public Offering (IPO)

The first sale of stock by a private company to the public, typically to raise capital.

Special Purpose Entities (SPEs)

Subsidiary companies created for a specific purpose, often used to manage risk by isolating financial exposure.

Mark-to-Market Accounting

An accounting method that values assets based on current market prices, rather than historical costs.

Derivatives

Financial contracts whose value is derived from the performance of an underlying asset.

Telecommunications Act of 1996

Legislation that deregulated the telecommunications industry, contributing to the rise of tech startups.

Venture Capital

Funding provided by investors to startup firms and small businesses with perceived long-term growth potential.

Leverage

The use of borrowed capital for (an investment), expecting the profits made to be greater than the interest payable.

Hysteria

An exaggerated or uncontrollable emotion or excitement, especially in times of mass speculation.

Insider Trading

The illegal practice of trading on the stock exchange to one's own advantage through having access to confidential information.

Market Manipulation

The act of artificially affecting the market price of securities to create a misleading picture of supply, demand, or market value.

Ownership Concentration

The degree to which wealth is distributed among the top owners, often leading to economic inequality in financial assets.

Non-working Class Returns

Higher rates of return on stock investments typically received by individuals who do not rely on labor income.

Securities and Exchange Commission (SEC)

The U.S. government agency responsible for regulating the securities markets and protecting investors.

Economic Mobility

The ability of an individual or family to improve (or lower) their economic status, often measured through income or wealth.

IPO Valuation Inflation

The practice of artificially boosting the perceived value of a company at initial public offerings to maximize investment returns.

Behavioral Finance

A field of finance that proposes psychology-based theories to explain stock market anomalies.

Stock Valuation

The process of determining the current worth of a stock, often influenced by market conditions and investor perceptions.