Chapter 11: Capital Market and Investment
capital
goods produced by the economic system that are used as inputs to produce other goods and services in the future
capital income
income earned on savings that have been put to use through financial capital markets
interest rate
interest payments expressed as a percentage of the loan
tangible capital
material things used as inputs in the production of goods and services
intangible capital
nonmaterial things contributing to the output of future goods and services
financial capital market
part of the capital market where savers and investors interact through intermediaries
dividend
payment made to shareholders of a corporation
interest
payments made for the use of money
depreciation
the decline in an asset's economic value over time
the capital market
the market in which households supply their savings to firms that demand funds to buy capital goods
capital stock
for a single firm, the current market value of the firm's plant, equipment, inventories and intangible assets
flow
________ measures over a period of time
stock
___________ measures a point in time
investment
a flow that increases the stock of capital
common stock
a share of stock is an ownership claim on a firm, entitling its owner to a profit share
expected rate of return
annual rate of return that a firm expects to obtain through a capital investment
social capital/infrastructure
capital that provides services to the public ex. roads
bond
contract between a borrower and a lender, and the borrower agrees to pay the loan at sometime in the future