Business quizz/test ch19

Card Set Information

Business quizz/test ch19
2010-03-23 19:49:05

business quizz/test ch19
Show Answers:

  1. what is initial public offering(IPO)?
    the first public offering of corporations stock
  2. what are investment bankers?
    specialists who assist in the issue and sale of new securities.
  3. what are institutional investors?
    large organizations such as pension funds, mutual funds, insurancce companies, and banks that invest their own funds or the funds of others.
  4. what is a bond?
    a corporate certificate indicating that a person has lent money to a firm
  5. what is interest?
    the payment the issuer of the bond makes to the bondholders for use of the borrowed money
  6. what is maturity date?
    the exact date the issuer of a bond must pay the principal to the bondholder
  7. what are debarture bonds?
    bonds that are unsecured(not backed by any collateral such as equipment)
  8. what is a sinking fund?
    a reserve account in which the issuer of a bond peridically retires some part of the bond principal prior to maturity so that enough capital will be accumulated by the maturity date to pay off the bond
  9. what are stocks?
    shares of ownership in a company
  10. what is a stock certificate?
    evidence of stock ownership that specifies the name of the company, the number of shares it represents, and type of stock being issued.
  11. what are dividends?
    part of a fims profits that may be distributed to stockholders as either cash payments or additional shares of stock.
  12. what is a preferred stock?
    stock that gives its owners preference in the payment of dividends and an earlier claim on assets than common stockholders if the company is forced out of business and its assets sold
  13. what is a common stock?
    the most basic form of ownership in a firm; it confers voting rights and the right to share in the firms profits through dividends, if apprved by the firms board of directors
  14. what is stock exchange?
    an organization whose members can buy and sell securities for companies and individual investors
  15. what is the over-the-counter (OTC) market?
    exchange that provides a means to trade stocks not listed on the national exchange
  16. what is nasdaq?
    a nationwide electrinic system that links dealers across the nation so that they can buy and sell securities electronically
  17. what is the securities and exchange commission (SEC)?
    federal agency that has responsibility for regulating the various exchanges.
  18. what is prospectus?
    a condensed version of economic and financial information that a company must file with the SEC befor issuing stock; the prospectus must be sent to prospective investors
  19. what is a stockbroker?
    a registered representative who works as a market intermediary to buy and sell securities for clients.
  20. what are capital gains?
    the positive difference between the purchase price of a stock and its sale price
  21. what are stock splits?
    an action by a company that gives stockholders two or more shares of stock for each one they own
  22. what is a mutal fund?
    an organization that buys stocks and bonds and then sells shares in those securities to the public.
  23. what is exchange-traded funds (ETFs)?
    collections of stocks that are traded on exchanges but are traded mor elike individual stocks than like mutual funds.
  24. what is diversification?
    buying several different investment alternatives to spread the risk of investing
  25. what are junk bonds?
    high-risk, high interest bonds.
  26. what is buying stock on margin?
    purchasing stocks by borrowing some of the purchase cost from the brokerage firm.
  27. what is commodity exchange?
    a securities exchange taht specializes in the buying and selling of precious metals and minerals(silver, foreign currencies, gasoline) and agricultural goods (wheat, cattle,sugar)
  28. what are future markets?
    commodities markets that involve the purchase and sale of goods for delivery sometime in the future.
  29. what is the dow jones industrial average(the DOW)?
    the average cost of 30 selected industrial stocks, used to give an indication of the direction up or down of the stock market over time.
  30. what is program trading?
    giving instructions to computers to automatically sell if the price of a stock dips to a certain point to avoid potential losses