| Term | Definition |
|---|
| medium of exchange | anything that is used to determine value during the exchange of goods and services |
| barter | the direct exchange of one set of goods or services for another |
| currency | coins and paper bills used as money |
| diversification | spreading out investment to reduce risk |
| greenback | paper currency issued by North during Civil War |
| gold standard | monetary system in which paper money and coins are equal in value to a certain amount of gold |
| credit card | card entitled its holder to buy goods and services based on holder's promise to pay these goods and services |
| mortgage | specific type of loan that is used to buy real estate |
| default | failure to pay back a loan |
| investment | 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 |
| portfolio | collection of financial assets |
| mutual fund | fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds and other financial assets |
| par value | amount that an investor pays to purchase a bond and that will be repaid to investor at maturity |
| maturity | the time at which payment to a bondholder is due |
| security and exchange commission | independent agency of the government that regulates financial markets and investment companies |
| junk bond | lower-rated, potentially higher-paying bond |
| bear market | steady drop in the stock market over a period of time |
| capital gains | difference between a higher selling price and a lower purchase price, resulting in a financial gain for the seller |
| brokerage firm | a business that specializes in trading stocks |
| The Dow | index that shows how certain stocks have traded |
| speculation | the practice of making high-risk investments with borrowed money in hopes of getting a big return |
| divisibility | money easily divided into small denominations, or units of value |
| uniformity | any two units of money must be the same; people must be able to count and measure money accurately |
| free banking era | fall of Second bank triggered period dominated by state-chartered banks |
| backing of money | fee-out money |
| banking reforms | Roosevelt declared a national "bank holiday" and closed the nation's banks to restore public confidence in the nation's banking system |
| simple and compound interests | price paid for use of borrowing money; simple is paid only on principal; compound paid on both principal and accumulated interest |
| bank and profit | large source of income for banks is interest from customers who have taken loans |
| certificate of deposit | common form of investment; can cost as little as $100 |
| dubloons | Spanish coins with lines etched so they could be divided into eight parts |
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