Bus 226 final study guide terms

A bank run

A bank run occurs when a large number of customers of a bank or another financial institution withdraw their deposits simultaneously due to concerns about the bank's solvency, but usually during a panic

The three branches of the federal government

Legislative, Executive, Judicial

Branch Banking

A business practice whereby a single, large bank conducts business from several locations

Commondities and commondity trading

A commodity is a basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services.

Panic of 1907

A financial crisis that happened when the New York Stock Exchange crashed. Panic spread through the nation, resulting in many runs on banks and bank failures. It led to the creation of the Federal Reserve. Also known as the Bankers' Panic.

Oligopoly

A market structure in which a few large firms dominate a market

The Gold standard

A monetary system in which paper money and coins are equal to the value of a certain amount of gold

Short sale/selling short

A short sale in real estate is when a financially distressed homeowner sells his or her property for less than the amount due on the mortgage. The buyer of the property is a third party (not the bank), and all proceeds from the sale go to the lender.

Securities

All of the investments, including stocks, bonds, mutual funds, options, and commodities, that are traded.

Capitalism - how would you define it in a simple sense?

An economic system based on the "Survival of the fittest".

New York Clearinghouse Association

Before the Federal Reserve System was established in 1913, the New York Clearing House Association also worked to stabilize the monetary system

Morganization

Business practices commonly used by banker J.P. Morgan, who would buy out weak companies, reorganize them, and make a huge profit, usually by making a monopoly.

Capital - what is it?

Capital is not only money, but is used to generate money through investments as well

Collateral or collateralization

Collateral is a property or other asset that a borrower offers as a way for a lender to secure the loan. If the borrower stops making the promised loan payments, the lender can seize the collateral to recoup its losses. Collateralization occurs when a borrower pledges an asset as recourse to the lender in the event that the borrower defaults on the initial loan.

merger

Combination of two or more companies into a single firm

Holding Companies

Companies that hold a majority of another company's stock in order to control the management of that company. Can be used to establish a monopoly.

Monopoly

Complete control of a product or business by one person or group

retail banking

Consumer-oriented banking, such as providing residential and consumer loans and accepting smaller deposits.

Banks and Banking

Federal reserve 12 branches, and how they affect the banks

Finance Capitalism

Finance capitalism is characterized by a predominance of the pursuit of profit from the purchase and sale of, or investment in, currencies and financial products such as bonds, stocks, futures and other derivatives.

The interstate commerce commission

Former independent agency of the U.S. government, established in 1887; it was charged with regulating the economics and services of specified carriers engaged in transportation between states. Surface transportation under the it's jurisdiction included railroads, trucking companies, bus lines, freight forwarders, water carriers, oil pipelines, transportation brokers, and express agencies. After his election in 1904, Theodore Roosevelt demonstrated support of progressive reforms by strengthening this.

Liquitidy

How quickly you are able to get cash or liquid assets

Secondary markets: New York stock exchange and the chicago board of trade

Market Influence and Future Investment. ... Unlike primary markets, which set stock prices before stocks are issued, secondary markets allow stock prices to develop based on supply and demand .

Bonds

Paper notes promising to repay money after a certain length of time with interest

Tarrifs

Taxes on imported goods

Commerce Clause of the US constitution and its importance

The Commerce Clause allocates power to Congress for regulating commerce among states and with foreign nations and Indian tribes.

The great merger movement

The Great Merger Movement was a predominantly U.S. business phenomenon that happened from 1895 to 1905. During this time, small firms with little market share consolidated with similar firms to form large, powerful institutions that dominated their markets.

Trusts and Antitrust Laws

The Sherman Anti-Trust Act was the first Federal act that outlawed monopolistic business practices. In 1892, the American Sugar Refining Company gained control of the E. C. Knight Company and several others which resulted in a 98% monopoly of the American sugar refining industry. President Grover Cleveland, in his second term of office (1893-1897), directed the national government to sue the Knight Company under the provisions of the Sherman Antitrust Act to prevent the acquisition. The government sought to prosecute Standard Oil under the Sherman Antitrust Act. The main issue before the Court was whether it was within the power of the Congress to prevent one company from acquiring numerous others through means that might have been considered legal in common law, but still posed a significant constraint on competition by mere virtue of their size and market power, as implied by the Antitrust Act.

The rise of mass production practices

The moving assembly line Factories and interchangeable parts Overall productivity in production Managerial techniques focused on efficiency

Unions and the rise of membership in the Great Depression

The tremendous gains labor unions experienced in the 1930s resulted, in part, from the pro-union stance of the Roosevelt administration and from legislation enacted by Congress during the early New Deal. The National Industrial Recovery Act (1933) provided for collective bargaining.

Federal Reserve Act

a 1913 law that set up a system of federal banks and gave government the power to control the money supply

Federal Trade Commission

a federal agency established in 1914 to investigate and stop unfair business practices

Duopoly

an oligopoly consisting of only two firms

supply chain

consists of all parties involved, directly or indirectly, in obtaining raw materials or a product

A "corner" and a "squeeze" in the market

cornering the market means that you own so much of the stock in an attempt to manipulate the market price squeezing the market is when there is a difficult time borrowing money inside the market

Consumer Capitalism

is a theoretical economic and social political condition in which consumer demand is manipulated, in a deliberate and coordinated way, on a very large scale, through mass-marketing techniques, to the advantage of sellers.

an acquisition

is the purchase of one company by another with no new company being formed.

buying on margin

paying a small percentage of a stock's price as a down payment and borrowing the rest

industrial capitalism

refers to an economic and social system in which trade, industry and capital are privately controlled and operated for a profit.

Inventories ( and why these are important to businesses)

stocks of goods and raw materials held to facilitate business operations

Equities

stocks that represent ownership shares in corporations

Fordism

the manufacturing economy and system derived from assembly-line mass production and the mass consumption of standardized goods. Named after Henry Ford.

Investment Banking

the sale of stocks and bonds for corporations

Capitalization

the total amount of stocks and bonds issued by a corporation