Question 1

Investment

Accepted Answer

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.

Question 2

Financial System

Accepted Answer

The network of structures and mechanisms that allows the transfer of money between savers and borrowers.

Question 3

Financial Asset

Accepted Answer

A claim on the property or income of a borrower.

Question 4

Financial Intermediary

Accepted Answer

An institution that helps channel funds from savers to borrowers.

Question 5

Mutual Fund

Accepted Answer

An organization that pools the savings of many individuals and invests this money in a variety of stocks, bonds and other financial assets.

Question 6

Hedge Fund

Accepted Answer

A private investment organization that employs high risky strategies that often made huge profits for investors.

Question 7

Diversification

Accepted Answer

The strategy of spreading out investments to reduce risk.

Question 8

Portfolio

Accepted Answer

A collection of financial assets.

Question 9

Prospectus

Accepted Answer

An investment report that provides information to potential investors.

Question 10

Return

Accepted Answer

The money an investor receives above and beyond the sum of money initially invested.

Question 11

Coupon Rate

Accepted Answer

The interest rate that a bond issuer will pay to the bond holder.

Question 12

Maturity

Accepted Answer

The time at which payment to a bondholder is due.

Question 13

Par Value

Accepted Answer

A bond's stated value, to be paid to the bondholder at maturity.

Question 14

Yield

Accepted Answer

The annual rate of return on a bond if the bond is held to maturity.

Question 15

Savings Bond

Accepted Answer

A low-denomination bond issued by the United States government.

Question 16

Inflation-indexed Bond

Accepted Answer

A bond that protects the investor against inflation by its linkage to an index of inflation.

Question 17

Municipal Bond

Accepted Answer

A bond issued by a state or local government or a municipality to finance a public project.

Question 18

Corporate Bond

Accepted Answer

A bond issued by a corporation to help raise money for expansion.

Question 19

Junk Bond

Accepted Answer

A bond with high risk and potentially high yield.

Question 20

Capital Market

Accepted Answer

A market in which money is lent for periods longer than a year.

Question 21

Money Market

Accepted Answer

A market in which money is lent for periods of one year or less.

Question 22

Primary Market

Accepted Answer

A market for selling financial assets that can be redeemed by the original holder.

Question 23

Secondary Market

Accepted Answer

A market for reselling financial assets .

Question 24

Share

Accepted Answer

A portion of stock.

Question 25

Capital Gain

Accepted Answer

The difference between the selling price and purchase price that results in a financial gain for the seller.

Question 26

Capital Loss

Accepted Answer

The difference between the selling price and purchase price that results in a financial loss for the seller.

Question 27

Stock Split

Accepted Answer

The division of each single share of a company's stock into more than one share.

Question 28

Stockbroker

Accepted Answer

A person who links buyers and sellers to stock.

Question 29

Stock Exchange

Accepted Answer

A market for buying and selling stock.

Question 30

Futures

Accepted Answer

Contracts to buy or sell commodities at a particular date in the future at a price specified today.

Question 31

Options

Accepted Answer

Contracts that give investors the right to buy or sell stock and other financial assets at a particular price until a specified future date.

Question 32

Call Option

Accepted Answer

A contract for buying stock at a particular price until a specified future date.

Question 33

Put Option

Accepted Answer

A contract for selling stock at a particular price until a specified future date.

Question 34

Bull Market

Accepted Answer

A steady rise in the stock market over a period of time.

Question 35

Bear Market

Accepted Answer

A steady drop or stagnation in the stock market over a period of time.

Question 36

Speculation

Accepted Answer

The practice of making high risk investments with borrowed money in hope of getting a big return.

Question 37

Brokerage Firm

Accepted Answer

A business that specializes in trading stock.

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