Unit Review Summary

Money Definition: A medium of exchange improving the barter system; includes fiat and electronic money.
Banking System: Foundation of the economy; functions under fractional reserve banking; collects deposits and provides loans.
Required Reserve Ratio: Amount banks must keep on hand set by the Fed; excess can be loaned out.
Interest on Loans: Loans repaid with interest, which is a primary income source for banks.
Federal Reserve (Fed): Regulates banks, ensures adherence to sound practices, controls money supply via required reserve ratios, discount rates, and open market operations.

Investment Risks: Stock market offers high potential returns but involves risks; companies can raise money through IPOs.
Market Capitalization: Measuring company size based on shares.
Stockholders: Own shares, have rights to company assets, and can vote.
Stock Types: Common and preferred stocks.
Stock Exchanges: Platforms for stock trading; brokers facilitate transactions.
Analyses: Fundamental (overviews company and economy) and technical (focuses on price movements).

Commodity Market: Trades raw goods; contracts are used for future trades.
Bond Market: Investors provide loans to governments/businesses for interest returns; bonds can be purchased at face value, premium, or discount.
Currency Exchange Market: Where different currencies are traded; classified into floating or fixed currencies with associated exchange rates.

Startup Capital: Initial funds necessary for business development; sourced through debt or equity financing.
Debt Financing: Involves loans; banks prefer those with proven business viability.
Equity Financing: Involves selling ownership stakes; includes angel investors and venture capitalists.
Initial Public Offering (IPO): A method companies use to become publicly traded, attracting capital but entails pros and cons.