Economics: Chapter 9 Sources of Capital

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Reasons for purchasing stock

-Gain a profit -limit risk on investments -become a part owner in a corporation

credit rating is determined by

-ability to pay -assets -credit history

Liquidity on a time deposit

-charged when withdrawing money also has high interest rate

Liquidity in a savings account

-you can withdraw without charge Also has low interest rate

Spending & Savings plan

Budget, list how much a person can/will spend

Bull Market

Financial market that rises and investors believe will continue to rise

Four elements of a personal financial plan

Spending and Savings plan, investment plan, retirement plan, and estate plan

Bonds

a document representing a loan made by an investor

Yields

annual income earned, total income earned, total interest paid

Futures

commodity that's bought in order to sell upon agreed price

Time Deposit

deposit earning interest that remains during a period of time

Investment Plan

diversification gives the person choices on investments -balances income

Liquidity

ease of turning savings, investments of other assets into cash

Credit Rating

evaluation of financial condition and reliability

Budget

financial plan summarizing income and expenditures

Venture Capital

funds invested in business for profit

Maturity

length of time that money must be deposited in time deposit

Retirement Plan

money set aside, may have 401K or IRA

Savings Rate

percentage of income that's not consumed by purchasing goods or services

Diversification

practice of spending money to investments, practice of reducing business

Capital Gain

profit earned through sale of capital assest

Stock

share of ownership in a corporation

Annual Percentage Rate (APR)

total cost of credit expressed as a yearly percentage

Estate Plan

transfer of property after a death -established beneficiary


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