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62 terms

Investment Test -Slay

STUDY
PLAY
Investment
anytime I buy something hoping it'll increase in value
Stock Market
legal gambling
Stocks
piece of a company
Kinds of stocks
Common and Preferred
Common Stock
Cheaper, more affordable; get small voice in company, get money last
Preferred Stock
No say in company, more experience, considered part of overhead, get paid like a bill money first
Dividend
Profit from company divided among stock holders
Ponzi
took others money from stock/fake investments
2 ways to make money on stock
selling or dividend
Stock Market Crash
Oct. 30th, 1929
Stock Market Analyst
Do nothing but, research
Broker
person who advises us how to spend money
Security and Exchange Commission
make sure company plays fair
Prospectus
tells how company is doing
Coveat emptor
buyers beware
Proxi
allow someone else to vote for them
Over-the-Counter
small business selling locally; want to expand, put out brochures for brokers
New York Stock Exchange
Biggest stock exchange in the world U.S. National market
Dow Jones
numbers being quoted what 30 select company's done today
Standard and Poors
Select 500 company's of what they average
National Association of Security Dealers of Automated Quotes (NASDAQ)
2nd American exchange
IPO
Initial Public Offering
Index
thumb tack of how NY is doing
Stock Split
company issues more stock while lowering price, stock gets to expensive
Price of Stock
it's due to supply and demand
During Stock Split
it's completely neutral, stock doesn't lose value even with price drop
2 types of investments
Real and financial
Real investments
create something new (the better of the 2)
Financial investments
buy something that already exist
Money
anything accepted as payment for a debt
Barter
trading a good for another
Legal tender
many issued by government
Money's value
is affected by supply and demand
Inflation
value of dollar goes down; price goes up
Deflation
Value of dollar goes up; price goes down
Russia
Reached hyper inflation, up to 1000%
Consumer Price Index (CPI)
measures value of dollar
4 Parts of FED
1. Board of 7 people, purpose is long term policy, 14 year terms, the president appoints them
2. Open Market Committee, control monetary policy
3. 12 district banks separated by financial activity
4. Presidential advisory counsel, advise presidential, no power
Functions of FED
1. act as banker to U.S. government
2. act as banker to commercial bank
3. supervise commercial bank
4. control monetary policy
Reserve requirement
bank has to keep only a certain amount of money on hand
Fiscal policy
ability to tax and spend, controlled by president and congress
interest rate
amount paid to the bank to use their money
discount rate
rate FED charges a commercial bank when they make a loan tax
Federal spending
less money for the people
Chairman of Fed
Bernacky
Law of Diminishing returns
If I add variable to fixed productivity with increase for a time, but then fall
Productivity
output worker per hour
Leading Economic Indicators
tells how well economy is functioning
Indicators
1. Productivity
2. Per captia incase (average income for average person)
3. Growth National Product (GNP) value of all goods and services produced by a country anually
4. Stock market -long term trends
5. CPI
Growth Domestic Product
physically produced in the country
Unemployment rate
16 and up actively seeking
Unemployment rate for U.S.
20%
Business cycle
what will happen in a mixed economy over an amount of time
C-Contraction
gets smaller
employment falls
consumer and business spending is done
R-Recession
bad economic times
employment is low
business and consumer spending is low
E-Expansion
getting bigger/grows
Employment goes up
Consumer and business spending goes up
B-Boom
extremely good economic times
Full employment <5%
Consumer and business spending extremely high
D-Depression
extremely bad economic times
employment is less then 70%
consumer and business spending stops
3 types of unemployment
Cyclical, Frictional, and Structural
Cyclical
lose job due to change in cycle
Frictional
temporary change; unavoidable
Structural
due to change in local economy or change in technology; local disruption