ECONOMICS CHAPTER 11 QUESTIONS AND GRADED
ANSWERS, 100% GUARANTEE
investment - the act of redirecting resources from being consumed today so that they may
create benefits in the future
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
diversification - spreading out investments to reduce risks
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 - 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 the business
Securities and Exchange Commission - 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 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 stock
equities - claims of ownership in a corporation
ANSWERS, 100% GUARANTEE
investment - the act of redirecting resources from being consumed today so that they may
create benefits in the future
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
diversification - spreading out investments to reduce risks
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 - 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 the business
Securities and Exchange Commission - 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 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 stock
equities - claims of ownership in a corporation
