Economics: Chapter 9 Sources of Capital
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