Term
| Where was the first stock market? |
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Definition
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Term
| Why did the government create the stock market? |
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Definition
| So they could borow money from the public to pay back debts on the revolutionary war. |
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Term
| What did Alexander Hamilton write in 1790? |
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Definition
| A Report on public credit |
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Term
| How did the government repay is debts from the revolutionary war? What was the result? |
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Definition
| By selling bonds to the public. The public then traded these bonds among themselves, and that's when the stock market began. |
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Term
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Definition
| The ability or ease with which assets can be converted into cash. |
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Term
| What did Hamilton undertsand? |
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Definition
| The importance of a market that provided liquidity. If it did not, peole would not want to but securities in the first place. |
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Term
| What was the purpose of the stock market? |
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Definition
| To provide investors with the ability to exchange a financial asset for cash. |
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Term
| What did Hamilton call the Nation's revolutionary war debts? |
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Definition
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Term
| When did the New York stock exchange make its formal appearance? |
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Definition
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Term
| What was the New York stock exchange originally like? |
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Definition
| It was a place on Wall street where people gathered and traded bonds. |
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Term
| What was originally traded on the stock exchange? |
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Definition
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Term
| What did the word "stock" refer to in 1792? |
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Definition
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Term
| What does the word "stock" mean today? |
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Definition
| A share of ownership of a corporation. |
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Term
| Why did corporations have to be created? |
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Definition
| They could attract sufficient savings from the publi for enormous tasks, like building railways. |
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Term
| How did corporations gain savings? |
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Definition
| by selling shares of ownership to stockgolders. |
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Term
| What advantages did stockholders gain by owning shares of corporations? |
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Definition
| They owned a portion of all earnings, but their potential loss was limited to the amount they invested in the comany. |
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Term
| When did shares of public corporations begin to be traded? |
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Definition
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Term
| Who created the Dow Joans Industrial Average? When? |
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Definition
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Term
| What was the Dow Joans Industrial Average? |
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Definition
| it consisted of Stocks from the 12 industrial companies. |
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Term
| How many companies are are the Dow Joans Industrial Average Now? |
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Definition
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Term
| What Company has remained on the Dow Joans since it was created? |
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Definition
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Term
| how did the market reflect on its buyers? |
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Definition
| It generated prices that reflected investors' best estimates of each companie's future potential. |
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Term
| What have technological changes done to the market? |
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Definition
| The telegraph, ticker tape, telephone, and Internet have broadened and deepened the market by assembing in one marketplace buy and sell offers from invesors everywhere. |
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Term
Why does the Stock market Exist?
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Definition
| To provide investors with liquidity, so that they may invest in corporations that need to raise funds in order to expand. |
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Term
| How does the stock market help support our high living standards? |
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Definition
| It directs savings towards the companies that generate employment, income, and taxes needed. |
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Term
| When did General Electric make it's IPO? |
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Definition
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Term
| How did GE put their shares up for sale? |
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Definition
| They did it with the help of businesses that identify potential investors. They sold their shares to the investors on the primary market, or new issues market |
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Term
| Why did the investors buy the shares? |
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Definition
| Because the stock market allowed them to sell the shares later when they needed cash. |
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Term
| When was GE first available in the stock market? |
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Definition
| When they listed their shares on the New York Stock exchange. |
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Term
| how did orgininal investors "trade-in" GE stocks. |
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Definition
| By going to the stock market, and trading them to other investors. |
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Term
| What is the market was GE traded on after the primary market? |
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Definition
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Term
| Whats does the secondary market allow? |
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Definition
| The general public to trade stocks as many times as they want, AFTER the original sale of the stock. |
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Term
| What does the stock market resemble? |
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Definition
| Markets that sell used cars, or existing houses. |
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Term
| Describe an auction market |
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Definition
| Brokers called out bidding prices, and asking prices. A succesful trade was made when a bidding price was matched with an asking price. |
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Term
| Who signed the Buttonwood agreement? |
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Definition
| Brokers who had been conducting auctions under the Buttonwood tree on wallstreet. |
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Term
| What did the Buttonwood agreement state? |
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Definition
| The brokers agreed to include only one another in their auctions, and to cahrge a given commision on any trades. |
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Term
| How were the NYSE and AMEX created? |
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Definition
| The signers of the buttonwood agreement moved indoors, becoming the NYSE. The Curb market (later called AMEX) remained outside on the curb and traded stocks not on the NYSE. |
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Term
| When did the curb stock Exchange adopt the name of the American Stock Exchange? |
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Definition
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Term
| The two biggest markets in the United states are... |
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Definition
| The New York Stock Exchange and The American Stock Exchange |
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Term
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Definition
| It's owned by its members, and lists many fewr stocks than NYSE. They also devloped ETF's. |
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Term
| What is the NYSE's "hybrid market" |
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Definition
| It combines automated trading, with the Auction style market. |
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Term
| What is the first step in purchasing stock? |
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Definition
| An investor places an order with a stock broker via mail, telephone, internet, or visiting their office. |
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Term
| What is second step in purchasing stock? |
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Definition
| The broker transfers an order by phone, or electronically to the florr of the NYSE. |
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Term
| What is the third step in purchasing stock? |
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Definition
| A floor broker routes the order to a specialist post. Other brokers gather there and participate in a continual auction of that particular stock. The specialist at the post oversees the market. The stock is then purched. |
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Term
| Brokers with the selling price are matched with brokers... |
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Definition
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Term
| How does the NASDAQ differ from the AMEX and NYSE? |
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Definition
| It has no physical trading floor, while the others do. |
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Term
| When was the NASDAQ established? |
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Definition
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Term
| What is the NYSE known for? |
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Definition
| Being the oldest stock exchange, and listing mostly blue-chip stocks. |
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Term
| What is the NASDAQ known for? |
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Definition
| Listing newer, smaller companie that often specialize in technology. |
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Term
| Which Exchange lists the most stocks? |
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Definition
| The NASDAQ, which has the highest trading volume of all the U.S. markets. |
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Term
| How were NASDAQ stocks originally traded? |
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Definition
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Term
| What do Market Makers do? |
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Definition
| These firms buy, sell, and hold listed stocks. Investors are likely to trade directly with one of these 400 Market Makers. |
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Term
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Definition
| electronic communication networks. They are electronic trading systems that automatically match buy and sell orders at a specific price. |
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Term
| Why is the developed market we have today good for investors? |
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Definition
| It allows them to trade in less time for a lower cost. |
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Term
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Definition
| A tradeable financial asset that represents ownership of a company or a loan to a company or government. |
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Term
| Why do investors take the risk of investing in stocks? |
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Definition
| Because they expect the comapny to prosper. |
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Term
| The value of a stock is based off of... |
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Definition
| the amount of income investors expect it to earn in the future. |
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Term
| What happens if the prospects of a company look higher...lower? |
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Definition
| Investors will bid the stock price up, or down. |
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Term
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Definition
| It represents basic ownership in a public company. It recieves most of the companies profits, and bears most losses. Investors are not gaurunteed dividends. |
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Term
| Describe preffered stockholders |
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Definition
| They are not entitled to most of the companie's profits, and do not bear the bulk of any losses. |
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Term
| What's the benefit of owning preffered stock? |
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Definition
| These investors must be payed a fixed dividend bfore the common stockholders are payed. Also, they are the first to be payed if the company fails and attemps to pay investors. |
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Term
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Definition
| IOUs that companies and government sell when they borrow money. |
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Term
| how to bonds pay you back? |
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Definition
| you get an IOU with periodic interest, and the company must pay back the loan when the bond matures. |
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Term
| Who are bonds bought from? |
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Definition
| other investors in the bond market. |
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Term
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Definition
| a secondary market where investors trade securities |
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Term
| why does the bond market rise and fall? |
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Definition
| its based on current and expected interest rates. |
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Term
| whats the relation between interest rates and bonds? |
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Definition
| If interest rates fall, bond prices usually rise, and vice versa. |
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Term
| What's the difference between corporate bonds and stocks? |
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Definition
| companies are legally obligated to pay the bonds' interest and to repay the loans when the bond matures. stock companies do not have to pay back the invested money, or dividends. |
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Term
| what is the risk on specific corporate bonds? |
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Definition
| a given company might not be able to pay not be able to pay all interests, or or repay bonds when mature. |
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Term
| how to treasury bonds campare to cororate bonds? |
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Definition
| they are backed by the credit of the federal government, and are much safer |
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Term
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Definition
| short-term debts that came due in 90 to a year |
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Term
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Definition
| they mature in 2-10 years |
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Term
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Definition
| they mature in 10-30 years |
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Term
| what kinds of securities are less risky? |
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Definition
| those with short lifespans. Therefore, they offer lower interest rates than long-life securities. |
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Term
| What two options do people have about how they invest? |
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Definition
| they can do it themsleves or have proffesional managers do it for them |
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Term
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Definition
| it pools the money of many money savers and invests it in many stocks or bonds |
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Term
| What does diversification do? |
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Definition
| it reduces risk by combining different investments. if the price of one stock fails, the stock of another may rise and offset the loss. |
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Term
| what are the three type of funds? |
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Definition
| Mutual funds, Exchange traded funds, and closed-end funds |
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Term
| are corporate bonds or treasury bonds cheaper and why? |
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Definition
| treasury bonds are cheaper because they have a lower risk. |
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