Unit IV Personal Finance Set II

New York Stock Exchange (NYSE)

The oldest and largest of the organized stock exchanges in the US.

Over the Counter (OTC)

Market for stocks that are NOT traded on a formal stock exchange.

NASDAQ

One of the world's largest stock exchanges. An OTC market (most are tech companies).

Future

A contract to buy or sell a commodity at a specified date and price.

Option

Similar to a future, but only gives the right, not the obligation to buy or sell.

Stock index

Measure of the change in prices for a specific set of stocks.

The Dow Jones Industrial Average (DJIA)

Tracks the stocks of 30 of the largest companies traded on the NYSE.

Standard & Poor's 500 (S&P 500)

An index based on the stock prices of 500 of the largest firms by market value.

Bull market

When stock prices rise steadily.

Bear market

When the trend in stock price is a steady decline.

Bond

A contract issued by a corporation promising to repay borrowed money, plus interest, on a fixed schedule.

Par Value

The amount that the bond issuer promises to pay the buyer at maturity.

Maturity

The date when the bond is due to be repaid.

Coupon rate

The interest rate a bondholder receives every year until a bond matures.

Yield

The annual rate of return on a bond if the bond were held to maturity

Junk bond

A lower-rated, potentially higher-paying bond.

Amortization Schedule

A calendar showing the interest and principal payments of a loan.

Principal Payment

The original sum of money borrowed for a loan (the amount of money borrowed minus interest).

Grant

Money given to someone that is NOT paid back.

Loan

Money given to someone that DOES have to be paid back.