Glossary of Financial and Business Terms, Quizzes of Introduction to Business Management

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TERM 1 Accounting DEFINITION 1 provides the information that users need to make investment decisions, lending decisions, and business decisions TERM 2 Equity DEFINITION 2 putting money into businesses without any guarantee that you will get the money back (also known as common stock, capital stock, additional paid in capital, retained earnings) TERM 3 A = L + SE DEFINITION 3 Assets = Liabilities + Shareholder's Equity TERM 4 Income statement DEFINITION 4 based on an accrual basis, trying to represent economic reality; revenues - expenses = net income TERM 5 Depreciation DEFINITION 5 spending out the cost of an asset in a rational way TERM 6 Sarbanes-Oxley Act of 2002 DEFINITION 6 legislation passed after Enron went under that puts standards on public company accounting TERM 7 Budget DEFINITION 7 a control tool to set goals to encourage high performances in spending and managing money TERM 8 Public accounting DEFINITION 8 when you work for a company to provide accounting services TERM 9 Industry accounting DEFINITION 9 working for a Fortune 500 company (Big Four: PWC, Deloitte, Ernest and Young, KPMG) TERM 10 Information technology DEFINITION 10 various appliances and devices for creating, storing, exchanging, and using information in diverse modes, including images, voice, multimedia, and business data (creates portable offices, enables better service, creates leaner and more efficient organizations, and enables increased collaboration) TERM 21 Firewall DEFINITION 21 security system with special software or hardware devices designed to keep computers safe from hackers TERM 22 Anti-virus software DEFINITION 22 product that protects systems by searching incoming e-mails and data files for "signatures" of known viruses and virus-like characteristics TERM 23 Structure of the Fed DEFINITION 23 public/private structure: Board of Governors and 12 regional banks (private sector) TERM 24 Current Fed chairman DEFINITION 24 Ben Bernake TERM 25 Money DEFINITION 25 an object that is portable, divisible, durable, and stable, and serves as a medium of exchange, a store of value, and a measure of worth TERM 26 M-1 DEFINITION 26 the measure of money supply that includes only the most liquid (spendable) forms of money (currency, checks, and checking accounts) TERM 27 Currency DEFINITION 27 government-issued paper money and metal coins TERM 28 M-2 DEFINITION 28 the measure of the money supply that includes all the components of M-1 plus the forms of money that can be easily converted into spendable forms (time deposits, money market mutual funds, etc.) TERM 29 Commercial banks DEFINITION 29 companies that accept deposits that they use to make loans, earn profits, pay interest to depositors, and pay dividends to owners (Wells Fargo, Chase, Frost, etc.) TERM 30 Mutual savings bank DEFINITION 30 a financial institution whose depositors are owners sharing in its profits TERM 31 Credit union DEFINITION 31 nonprofit, cooperative financial institution owned and run by its members, usually employees of a particular organization TERM 32 Pension fund DEFINITION 32 non-deposit pool of funds managed to provide retirement income for its members TERM 33 Insurance company DEFINITION 33 non-deposit institution that invests funds collected as premiums charged for insurance coverage TERM 34 Prime rate DEFINITION 34 interest rate available to a bank's most creditworthy customers (3.25%) TERM 35 Federal Deposit Insurance Corporation (FDIC) DEFINITION 35 federal agency that guarantees the safety of deposits up to $250,000 in the financial institutions that it insures TERM 46 Market value DEFINITION 46 current price of a share of stock in the stock market (daily change in price) TERM 47 Book value DEFINITION 47 value of a common stock expressed as the firm's owners' equity divided by the number of shares TERM 48 Dividend DEFINITION 48 payment to shareholders, on a per-share basis, out of the company's earnings (optional) TERM 49 Blue-chip stock DEFINITION 49 common stock issued by a well-established and respected company with a sound financial history and a stable pattern of dividend payouts TERM 50 Mutual fund DEFINITION 50 company that pools cash investments from individuals and organizations to purchase a portfolio of stocks, bonds, and other securities (alternative to common stock, purchased with small amounts of money, one price per day [as opposed to constantly changing]) TERM 51 Reasons for investing DEFINITION 51 Stability and safety, conservative capital growth, aggressive growth TERM 52 Exchange-traded fund (ETF) DEFINITION 52 bundle of stocks or bonds that are in an index that tracks the overall movement of a market but, unlike a mutual fund, can be traded like stock TERM 53 Securities DEFINITION 53 stocks, bonds, and mutual funds representing secured, or asset-based, claims by investors against issuers TERM 54 Securities markets DEFINITION 54 markets in which stocks and bonds are sold TERM 55 Primary securities market DEFINITION 55 market in which new stocks and bonds are bought and sold by firms and governments TERM 56 Secondary securities market DEFINITION 56 market in which existing (not new) stocks and bonds are sold to the public TERM 57 Bond DEFINITION 57 represents a financial claim of money owned by a company to a bondholder TERM 58 Securities and Exchange Commission (SEC) DEFINITION 58 government agency that regulates US securities markets TERM 59 Investment bank DEFINITION 59 financial institution that specializes in issuing and reselling new securities (do NOT take deposits) TERM 60 Stock exchange DEFINITION 60 an organization of individuals to provide an institutional auction setting in which stocks can be bought and sold