Term
|
Definition
| Institutions through which ones who wants to save can provide funds to those who want to borrow. |
|
|
Term
|
Definition
A certificate of indebtedness ("IOU").
Principal: Amount to be repaid + interest.
Date of maturity: date when a bond will be repaid. |
|
|
Term
| Long term vs. Short term bonds |
|
Definition
| Long term usually pay higher interest due to higher risk (in case you need your money earlier than the maturity date). |
|
|
Term
|
Definition
| probability that the borrower will fail to repay some of the interest or principal; when the repayment fails, it is called "default". Bankruptcy can be declared by the borrower to avoid paying fees, but risk of bankruptcy will lead to higher interest rate dues to increased risk. |
|
|
Term
| Federal gov't, Provincial gov't bonds |
|
Definition
| Provincial bonds have a higher interest rate due to higher risk (less diverse provincial economy as opposed to national economy). |
|
|
Term
|
Definition
| Bonds sold by "financially shaky" corporations in order to raise money. High interest rates. |
|
|
Term
|
Definition
| A claim to partial ownership of a firm. |
|
|
Term
|
Definition
| The sale of stocks to raise money. |
|
|
Term
|
Definition
| The sale of bonds to raise money. |
|
|
Term
|
Definition
Stocks offer higher risks and higher rates of return, due to the fact that a stock's compensation depends on the wellbeing of the corporation.
Bond holders also get paid before stock holders, due to their status as creditors. |
|
|
Term
|
Definition
| Computed as an average of a group of stock prices. Most famous is Dow Jones. |
|
|
Term
|
Definition
| Financial institutions through which savers (lenders) can INDIRECTLY provide funds to borrowers. |
|
|
Term
|
Definition
| Ways which people can easily use to trade in money (cheques, cash, credit card, etc.) |
|
|
Term
|
Definition
An institution that sells shares to the public and then uses the proceeds to buy bonds and stocks. The shareholders accept all risks and reap the dividends.
The Mutual Fund charges its stockholders between 0.5 and 3% of assets each year. |
|
|
Term
|
Definition
| Financial institutions through which savers can directly provide funds to borrowers. |
|
|
Term
|
Definition
Spending money on capital equipment, inventories and structures with the purpose of earning profit.
-Purchases of new housing is included under INVESTMENT. |
|
|
Term
| Define Private Savings and Public Savings |
|
Definition
Private savings is the surplus income that households have left after paying for taxes and consumption. This includes bonds and stocks bought.
Public Savings is the surplus tax revenue that the government has after paying for its spending. |
|
|
Term
|
Definition
| Private Savings + Public Savings |
|
|
Term
|
Definition
| S = (Y - T - C) + (T - G) |
|
|
Term
| Budget Surplus vs Deficit |
|
Definition
Budget Surplus is when the government's income form taxes (T) is higher than the government's spending (G). T > G
Budget Deficit is when the government's income from taxes (T) is lower than the government's spending (G). T < G |
|
|
Term
| Market for Loanable Funds |
|
Definition
| The market in which those who want to save supply funds and those who want to borrow to invest demand funds. |
|
|
Term
| The price of a loan is also known as the |
|
Definition
|
|
Term
|
Definition
| Sum of all gov't deficits + sum of all gov't surpluses. |
|
|
Term
|
Definition
| Fall in investment because the government is borrowing (instead of allowing firms to borrow). |
|
|
