| A | B |
|---|
| investment | the act of redirecting resources from being consumed today so that they may create benefits in the future; the use of assets to earn income or profit |
| financial system | the system that allows the transfer of money between savers and borrowers |
| financial asset | claim on the property or income of a borrower |
| financial intermediary | institution that helps channel funds from savers to borrowers |
| mutual fund | fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets |
| portfolio | a collection of financial assets |
| prospectus | an investment report to potential investors |
| return | the money an investor receives above and beyond the sum of money initially invested |
| coupon rate | the interest rate that a bond issuer will pay to a bondholder |
| maturity | the time at which payment to a bondholder is due |
| par value | the amount that an investor pays to purchase a bond and that will be repaid to the investor at maturity |
| yield | the annual rate of return on a bond if the bond were held to maturity |
| savings bond | low denomination bond issued by the United States government |
| municipal bond | a bond issued by a state or local government or municipality to finance such improvements as highways, state buildings, libraries, parks, and schools |
| corporate bond | a bond that a corporation issues to raise money to expand its business |
| SEC | an independent agency of the government that regulates financial markets and investment companies |
| junk bond | a lower-rated, potentially higher paying bond |
| capital market | market in which money is lent for periods longer than a year |
| money market | market in which money is lent for periods of less than a year |
| primary market | market for selling financial assets that can only be redeemed by the original holder |
| secondary market | market for reselling financial assets |
| share | portion of a stock |
| equities | claims of ownership in a corporation |
| capital gain | the difference between a higher selling price and a lower purchase price, resulting in a financial gain for the seller |
| capital loss | the difference between a lower selling price and higher purchase price, resulting in a financial loss to the seller |
| stock split | the division of a single share of stock into more than one share |
| stockbroker | a person who links buyers and sellers of stock |
| brokerage firm | a business that specializes in trading stocks |
| stock exchange | a market for buying and selling stocks |
| OTC market | an electronic marketplace for stocks and bonds |
| Nasdaq | American market for OTC securities |
| futures | contracts to buy or sell at a specific date in the future at a price specified today |
| options | contracts that give investors the choice to buy or sell stock and other financial assets |
| call option | the option to buy shares of stock at a specified time in the future |
| put option | the option to sell shares of stock at a specified time in the future |
| bull market | a steady rise in the stock market over a period of time |
| bear market | a steady drop in the stock market over a period of time |
| The Dow | index that shows how certain stocks have traded |
| S & P 500 | index that shows the price changes of 500 different stocks |
| Great Crash | the collapse of the stock market in 1929 |
| speculation | the practice of making high-risk investments with borrowed money in hopes of getting a big return |
