Chapter 11 Test- Financial markets

income not used for consumption

• Investment

• Savings

• diversification

• return

The use of income today that allows for greater production in the future.

• Investment

• Savings

• secondary market

• risk

Collects funds from savers and invests the funds in loans and other financial assets

• investment objective

• secondary market

• primary market

• financial intermediary

Two issues that play a major role in setting an investment objective.

• time and results

• time and income

• diversification and return

• risk and return

the share of ownership in a corporation that gives holders voting rights and a share of profit.

• Common Stock

• Preferred Stock

• Stock index

• primary market

The interest rate paid on a bond

• Coupon rate

• Par Value

• bond premium

• capital gain

The amount that a bond issuer promises to pay the buyer at maturity.

• Par value

• coupon rate

• Capital gain

• return

What is the relationship between risk and return?

• inverse

• direct

• multiple

• opposite

When it comes to investments in general, the higher the ____ the higher the potential reward.

• Security
• Cost
• Risk
• Damage

Banks bring together...

• savers and spenders

• savers and borrowers

• dealers and druggies

• cheeseburgers and fries