Economics Chapter 11 Test Study Guide
Vocabulary Terms
 put option
 Individual Retirement Account (IRA)
 portfolio diversification
 capital market
 tax-exempt
 Standard and Poor’s 500 (S & P 500)
 bear market
 mutual fund
 finance company
 401 (k) plan
Concepts
 Municipal Bonds
 What are they?
 What is their risk level?
 What type of investor do they attract?
 The different markets for trading stocks in the U.S.
 Where are most stocks traded?
 What trading occurs in each market?
 How does interest help you?
 Put v. Call options
 Which one gives you the right to sell?
 How does it work?
 What are the benefits/drawbacks?
 Which one gives you the right to buy?
 How does this work?
 What are the benefits/drawbacks?
 What are bonds?
 How do they work?
 What type of investment are they?
 What type of investor would be attracted to them?
 How do mutual funds work?
 Buying/Selling
 What are the advantages/disadvantages?
 What is the difference between:
 Capital markets,
 Primary markets,
 Money markets, and
 Secondary markets?
 Treasury Bonds
 Efficient Market Hypothesis
 How does this help investors?
 Par value of Bonds.
 How do savings rates effect the economy?
 Reading and interpreting stock tables.
 What are junk bonds?
 What are nonbank financial institutions?
 What is the spot market?