1.17.5: Key Terms
- Page ID
- 338951
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|---|---|---|---|---|---|
| (Eg. "Genetic, Hereditary, DNA ...") | (Eg. "Relating to genes or heredity") |  | The infamous double helix | https://bio.libretexts.org/ | CC-BY-SA; Delmar Larsen |
| Word(s) | Definition | Image | Caption | Link | Source |
|---|---|---|---|---|---|
| actual rate of return | the total rate of return, including capital gains and interest paid on an investment at the end of a time period | ||||
| bond | a financial contract through which a borrower like a corporation, a city or state, or the federal government agrees to repay the amount that it borrowed and also a rate of interest over a period of time in the future | ||||
| bond yield | the rate of return a bond is expected to pay at the time of purchase | ||||
| bondholder | someone who owns bonds and receives the interest payments | ||||
| capital gain | a financial gain from buying an asset, like a share of stock or a house, and later selling it at a higher price | ||||
| certificate of deposit, CD | a mechanism for a saver to deposit funds at a bank and promise to leave them at the bank for a time, in exchange for a higher interest rate | ||||
| checking account | a bank account that typically pays little or no interest, but that gives easy access to money, either by writing a check or by using a “debit card” | ||||
| compound interest | an interest rate calculation on the principal plus the accumulated interest | ||||
| corporate bond | a bond issued by firms that wish to borrow | ||||
| corporate governance | the name economists give to the institutions that are supposed to watch over top executives in companies that shareholders own | ||||
| corporation | a business owned by shareholders who have limited liability for the company’s debt yet a share of the company’s profits; may be private or public and may or may not have publicly-traded stock | ||||
| coupon rate | the interest rate paid on a bond; can be annual or semi-annual | ||||
| debit card | a card that lets the person make purchases, and the financial institution immediately deducts cost from that person’s checking account | ||||
| diversification | investing in a wide range of companies to reduce the level of risk | ||||
| dividend | a direct payment from a firm to its shareholders | ||||
| equity | the monetary value a homeowner would have after selling the house and repaying any outstanding bank loans used to buy the house | ||||
| expected rate of return | how much a project or an investment is expected to return to the investor, either in future interest payments, capital gains, or increased profitability | ||||
| face value | the amount that the bond issuer or borrower agrees to pay the investor | ||||
| financial intermediary | an institution, like a bank, that receives money from savers and provides funds to borrowers | ||||
| high-yield bonds | bonds that offer relatively high interest rates to compensate for their relatively high chance of default | ||||
| index fund | a mutual fund that seeks only to mimic the market's overall performance | ||||
| initial public offering, IPO | the first sale of shares of stock by a firm to outside investors | ||||
| junk bonds | see high-yield bonds | ||||
| liquidity | refers to how easily one can exchange money or financial assets for a good or service | ||||
| maturity date | the date that a borrower must repay a bond | ||||
| municipal bonds | a bond issued by cities that wish to borrow | ||||
| mutual funds | funds that buy a range of stocks or bonds from different companies, thus allowing an investor an easy way to diversify | ||||
| partnership | a company run by a group as opposed to an individual | ||||
| present value | a bond’s current price at a given time | ||||
| private company | a firm frequently owned by the people who generally run it on a day-to-day basis | ||||
| public company | a firm that has sold stock to the public, which in turn investors then can buy and sell | ||||
| risk | a measure of the uncertainty of that project’s profitability | ||||
| savings account | a bank account that pays an interest rate, but withdrawing money typically requires a trip to the bank or an automatic teller machine | ||||
| shareholders | people who own at least some shares of stock in a firm | ||||
| shares | a firm's stock, divided into individual portions | ||||
| simple interest | an interest rate calculation only on the principal amount | ||||
| sole proprietorship | a company run by an individual as opposed to a group | ||||
| stock | a specific firm's claim on partial ownership | ||||
| Treasury bond | a bond issued by the federal government through the U.S. Department of the Treasury | ||||
| venture capital | financial investments in new companies that are still relatively small in size, but that have potential to grow substantially |