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chp 11 question

Terms in this set (14)

What is a prospectus?
a report for possible investors
Why might you choose an investment with high risk instead of one with low risk?
for a higher return
what does a mutual fund do
invests the savings of many investors
how can borrowing money from banks help businesses grow
they invest the money
why would investors buy junk bonds
they pay higher interest
which of these is the most risky for investors
corporate bonds
What is gained and lost when swithcing from a short-term to a long-term CD
gained: interest, lost: liquidity
what is usually the relationship between a bond's rating and the interest rate a company pays
higher ratings mean lower interest
What does the New York Stock Exchange do?
Arranges stock and bond trading of top U.S. and world companies
whawt kind of assets are primarily traded using futures contracts
commodities
what happened to stock prices during the Great Crash in 1929
prices fell
what does teh Dow Jones Industrial average measure
average selling price of 30 top stocks in the NYSE
free enterprise system
an economic system characterized by private or corporate ownership of capital goods
Explain how investments contributes to the free enterprise system.
Investing is an essential part of the free enterprise system. When businesses use investments to expand and grow, they create new and better products and provide new jobs.
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