Chapter 16 Flashcards Preview

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Flashcards in Chapter 16 Deck (18)
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1
Q

stock

A

claim on the assets of a corporation that gives the purchaser a share of the corporation

2
Q

Dow Jones Industrial Average

A

Most popular, widely cited indicator of day-to-day stock market activity. Weighted average of 30 widely traded stocks

3
Q

Initial Public Offering

A

Company’s first offering of stock to the public

4
Q

investment bank

A

firm that acts as an intermediary between the company that issues the stock and the public that wishes to buy the stock.

5
Q

dividend

A

share of the profits of a corporation distributed to stockholders

6
Q

index

A

portfolio of stocks, which represents a particular market or a portion of it, used to measure changes in a market or an economy

7
Q

bond

A

an IOU, or a promise to pay, issued by companies, governments, or government agencies for the purpose of borrowing money

8
Q

face value (par value)

A

dollar amount specified on the bond. the total amount the issuer of the bond will repay to the buyer of the bond

9
Q

coupon rate

A

percentage of the face value that the bond holder receives each year until the bond matures

10
Q

yield

A

annual coupon payment divided by price paid for the bond

11
Q

futures contract

A

agreement to buy or sell a specific amount of something at a particular price on a stipulated future date

12
Q

option

A

contract that gives the owner the right, but no the obligation, to buy or sell shares of a good at a specified price on or before a specified date

13
Q

corporate bond

A

Issued by private corporation. Sold at 10k average but can fluctuate on supply/demand. Interest paid on bond IS taxable

14
Q

municipal bond

A

Issued by state/local governments. Interest paid on bond IS NOT taxable

15
Q

Treasure bills, notes, and bonds

A

Bonds issued by federal govt. Bills mature in 13, 26, or 52 weeks. Notes mature in 2-10 years. Bonds mature in 10-30 years.

16
Q

Inflation-indexed treasury

A

Value of bond goes up with inflation to ensure that people are getting a certain “real-value” of money.

17
Q

Call Option

A

right to buy shares of a stock at a specified price within time limit. Use this when you a company’s stock is going to increase.

18
Q

Put Option

A

right to sell shares of stock at a certain price. Use this when you think a company’s stock you own will go down.