Economics Chapter 11 Financial Markets

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 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

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

"Bear Market"

• A period of time during which stock prices are falling
• A period of time during which stock prices are rising
• The network of structures that allows for the transfer of money between savers and investors
• Making high-risk investments with borrowed money

"Bull Market"

• A period of time during which stock prices are falling
• A period of time during which stock prices are rising
• The network of structures that allows for the transfer of money between savers and investors
• Making high-risk investments with borrowed money

"Stock Exchange"

• A person who manages the buying and selling of stocks
• A market where stocks can be bought and sold
• The range of investments held by a person or organization
• A report that describes a company's financial history

Corporate bonds are issued by...

• Private Companies
• Local Governments
• The Federal Government
• Banks