| A | B |
|---|
| money | Anything commonly accepted as a medium of exchange, measure of value, and store of value. |
| demand deposits | Checking accounts that which pay given sums to "payees" when they demand them. |
| money market mutual funds | Accounts that pay interest to investors who pool funds to make short-term loans to businesses and the government. |
| M-1 | Measure of the money supply that includes only the most liquid forms of money, such as cash and checking-account funds. |
| M-2 | Measure of the money supply that includes everything in M-1 plus near-cash. |
| commercial bank | Financial institution that generates profits by loaning funds and providing customers with services, such as check processing. |
| savings bank | Financial institution originally set up to provide mortgages and encourage saving, which now offers services similar to those of commercial banks. |
| credit union | Financial institution that provides services to only its members (who are associated with a particular organization). |
| finance company | Nondeposit financial institution that makes loans from funds acquired by selling securities or borrowing from commercial banks. |
| insurance company | Nondeposit institution that collects premiums from policyholders for protection against losses and invests these funds. |
| brokerage firm | Financial institution that buys and sells stocks, bonds, and other investments for clients. |
| mutual fund | Financial institution that invests in securities, using money pooled from investors (who become part owners of the fund). |
| money market fund | Fund invested in safe, highly liquid securities. |
| pension fund | Fund set up to collect contributions from participating companies for the purpose of providing its members with retirement income. |
| individual retirement account (IRA) | Personal retirement account set up by an individual to save money tax free until retirement. |
| Federal Depository Insurance Corporation (FDIC) | Government agency that regulates banks and insures deposits in its member banks up to $100,000. |
| money multiplier | The amount by which an initial bank deposit will expand the money supply. |
| Federal Reserve System (the Fed) | U.S. central banking system, which has three goals: price stability, sustainable economic growth, and full employment. |
| discount rate | Rate of interest the Fed charges member banks when they borrow reserve funds. |
| open market operations | The sale and purchase of U.S. government bonds by the Fed in the open market. |
| federal funds rate | The interest rate that a Federal Reserve member bank pays when it borrows from other member banks to meet reserve requirements. |
| prime rate | Rate that banks charge their best customers. |
| financial plan | Planning document that shows the amount of funds a company needs and details a strategy for getting those funds. |
| maturity | Period of time for which a bank loan is issued. |
| short-term loan | Loan issued with a maturity date of less than one year. |
| intermediate loan | Loan issued with a maturity date of one to five years. |
| long-term loan | Loan issued with a maturity date of five years or more. |
| lines of credit | Commitment by a bank that allows a company to borrow up to a specified amount of money as the need arises. |
| amortization | Schedule by which you’ll reduce the balance of your debt. |
| security | Collateral pledged to secure repayment of a loan. |
| collateral | Specific business or personal assets that a bank accepts as security for a loan. |
| unsecured loan | Loan given by a bank that doesn’t require the borrower to put up collateral. |
| interest | Cost charged to use someone else’s money. |
| cash-flow management | Process of monitoring cash inflows and outflows to ensure that the company has the right amount of funds on hand. |
| trade credit | Credit given to a company by its suppliers. |
| budget | Preliminary financial plan for a given time period, generally a year. |
| cash budget | Financial plan that projects cash inflows and outflows over a period of time. |
| capital budget | Budget that shows anticipated expenditures for major equipment. |
| angel | Wealthy individual willing to invest in start-up ventures. |
| venture capitalist | Individual who pools funds from private and institutional sources and invests them in businesses with strong growth potential. |
| initial public offering (IPO) | Process of taking a privately held company public by selling stock to the public for the first time. |
| investment banking firm | Financial institution that specializes in issuing securities. |
| primary market | Market that deals in the sale of newly issued securities. |
| secondary market | Market in which investors buy previously issued securities from other investors. |
| New York Stock Exchange (NYSE) | Best-known stock market where stocks of the largest, most prestigious corporations are traded. |
| American Stock Exchange (AMEX) | Stock market where shares of smaller companies are traded. |
| over-the-counter (OTC) market | Market in which securities are traded over computer networks and phones rather than on the trading floor of an exchange. |
| NASDAQ | Best-known over-the-counter, electronic exchange system. |
| Securities and Exchange Commission (SEC) | Government agency that enforces securities laws. |
| prospectus | Written offer to sell securities that provides useful information to prospective buyers. |
| insider trading | Practice of buying or selling of securities using important information about the company before it’s made public. |
| market index | Measure for tracking stock prices. |
| Dow Jones Industrial Average (DJIA) | Market index that reflects the total value of a "market basket" of 30 large U.S. companies. |
| NASDAQ Composite Index | Market index of all stocks listed on the NASDAQ Stock Exchange. |
| Standard & Poor’s Composite Index (S&P 500) | Market index of the stocks of 500 large U.S. companies. |
| bull market | Period of large stock-price increases. |
| bear market | Period of declining or sluggish stock prices. |
| equity financing | Process of raising capital for a company through the sale of stock. |
| debt financing | Process of raising capital for a company through the sale of bonds. |
| stockholders’ equity | Amount invested in a corporation by its shareholders. |
| dividends | Earnings distributed to stockholders. |
| common stock | Stock whose owners bear the ultimate rewards and risks of ownership. |
| preferred stock | Stock that pays owners a fixed dividend annually. |
| cumulative preferred stock | Preferred stock that requires a corporation to pay all current and missed preferred dividends before it can pay common dividends. |
| convertible preferred stock | Preferred stock that gives its owner the option of exchanging it for common stock. |
| bonds | Debt securities that require annual interest payments to bondholders. |
