Economics Chapter 11 Test Study Guide



Economics Chapter 11 Test Study Guide

Vocabulary Terms

□ put option

□ Individual Retirement Account (IRA)

□ portfolio diversification

□ capital market

□ tax-exempt

□ Standard and Poor’s 500 (S & P 500)

□ bear market

□ mutual fund

□ finance company

□ 401 (k) plan

Concepts

□ Municipal Bonds

■ What are they?

■ What is their risk level?

■ What type of investor do they attract?

□ The different markets for trading stocks in the U.S.

■ Where are most stocks traded?

■ What trading occurs in each market?

□ How does interest help you?

□ Put v. Call options

□ Which one gives you the right to sell?

□ How does it work?

□ What are the benefits/drawbacks?

□ Which one gives you the right to buy?

□ How does this work?

□ What are the benefits/drawbacks?

□ What are bonds?

■ How do they work?

■ What type of investment are they?

■ What type of investor would be attracted to them?

□ How do mutual funds work?

■ Buying/Selling

■ What are the advantages/disadvantages?

□ What is the difference between:

■ Capital markets,

■ Primary markets,

■ Money markets, and

■ Secondary markets?

□ Treasury Bonds

□ Efficient Market Hypothesis

■ How does this help investors?

□ Par value of Bonds.

□ How do savings rates effect the economy?

□ Reading and interpreting stock tables.

□ What are junk bonds?

□ What are nonbank financial institutions?

□ What is the spot market?

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