Chapter 8 economics
Terms in this set (25)
Asset allocation is an investment strategy that attempts to balance risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame.
Building that holds money and or gives out loans ect
a market in which prices are falling, encouraging selling.
A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities.
an estimate of income and expenditure for a set period of time.
a market in which share prices are rising, encouraging buying.
A debt-based funding arrangement that a business can set up with a financial institution. The proceeds of commercial loans may be used to fund large capital expenditures and/or operations that a business may otherwise be unable to afford.
Compound interest is interest added to the principal of a deposit or loan so that the added interest also earns interest from then on. This addition of interest to the principal is called compounding.
Consumer debt can be defined as 'money, goods or services provided to an individual in lieu of payment.' Common forms of consumer credit include credit cards, store cards, motor (auto) finance, personal loans (installment loans), consumer lines of credit, retail loans (retail installment loans) and mortgages.
A corporate bond is a bond issued by a corporation. It is a bond that a corporation issues to raise money effectively in order to expand its business. The term is usually applied to longer-term debt instruments, generally with a maturity date falling at least a year after their issue date.
A record of a consumer's ability to repay debts and demonstrated responsibility in repaying debts.
In finance, diversification means reducing non-systematic risk by investing in a variety of assets.
a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits (or reserves).
Fractional reserve banking
A banking system in which only a fraction of bank deposits are backed by actual cash-on-hand and are available for withdrawal. This is done to expand the economy by freeing up capital that can be loaned out to other parties.
An installment loan is a loan that is repaid over time with a set number of scheduled payments; normally at least two payments are made towards the loan. The term of loan may be as little as a few months and as long as 30 years.
money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.
expend money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property, or by using it to develop a commercial venture.
coins or banknotes that must be accepted if offered in payment of a debt.
the availability of liquid assets to a market or company
the charging of real (or personal) property by a debtor to a creditor as security for a debt (especially one incurred by the purchase of the property), on the condition that it shall be returned on payment of the debt within a certain period.
an investment program funded by shareholders that trades in diversified holdings and is professionally managed.
(of money) denoting an original sum invested or lent.
Rate of return
Rate of return is a profit on an investment over a period of time, expressed as a proportion of the original investment. The time period is typically a year, in which case the rate of return is referred to as annual return. Return, in the second sense, and rate of return, are commonly presented as a percentage.
Rule of 72-
stating that in order to find the number of years required to double your money at a given interest rate, you divide the compound return into 72. The result is the approximate number of years that it will take for your investment to double.
the goods or merchandise kept on the premises of a business or warehouse and available for sale or distribution