Economics Chapter 11 Vocabulary

1. provide diversification and lower risk by purchasing stocks issued by hundreds or thousands of companies.
3. mature up to 52 weeks and sold on a discount basis.
5. makes economic growth possible because it makes funds available for others to use.
8. principal of a bond or the total amount of the bond.
10. a market in which prices move up for several months or years in a row
12. How the stock did by the end of the day compared to the beginning of the day.
13. is key to successful investing.
16. How many Components are there of Bonds?
17. a market in which prices move down for several months or years in a row
20. is the right to sell something at a specific future price or cancel if the actual future price is not advantageous to the buyer.
21. are long-term, tax-sheltered deposits.
24. similar to CDs but these are made directly to the government.
27. we can make a loan to a bank, and they will repay that loan once the term limits have been met.
29. is the right to buy something at a specific future price or cancel if the actual future price is not advantageous to the buyer.
30. are issued by the U.S. government and sell at face value, with interest added later.

1. money is loaned for a period of less than one year.
2. claims of income and property of the borrower (individual). Ex. stocks, savings, CDs, Treasury bills, and mortgages.
4. the value of the shares issued by a company.
5. among buyers and sellers, this establishes the final price of a bond to be bought.
6. the CD has a maturity of more than one year
7. life of the bond. Ex. 30 years before you can cash it out.
9. is an agreement to buy or sell at a specific future date at a predetermined price.
11. Most successful investors invest consistently over short or long periods?
14. bonds can be long-term investments but can be sold quickly if needed.
15. mature 2-10 years, and Treasury bonds in 20-30 years.
18. are tax-exempt bonds issued by state and local governments.
19. interest rate that is paid on the par value. Ex. 5% interest means 5% paid yearly.
22. Formal long-term contract that requires repayment of borrowed money and interest on the borrowed funds at regular intervals over time.
23. The number of parts within the Circular Flow of Financial Institutions.
25. a corporation that publishes bond ratings to help investors check the quality of bonds.
26. a numbered corporation that publishes bond ratings to help investors check the quality of bonds.
28. is a futures contract that gives the buyer the right to cancel the contract if the price drops.