Splash Screen - PowerPoint PPT Presentation

Loading...

PPT – Splash Screen PowerPoint presentation | free to download - id: 81febb-M2QxM



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Splash Screen

Description:

Economics: Principles and Practices - mpasd.net ... Splash Screen – PowerPoint PPT presentation

Number of Views:86
Avg rating:3.0/5.0
Slides: 136
Provided by: Glencoe426
Learn more at: http://www.mpasd.net
Category:
Tags: money | save | screen | splash | wisely

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Splash Screen


1
Splash Screen
2
Chapter Menu
Chapter Introduction Section 1 Savings and the
Financial System Section 2 Financial Assets and
Their Markets Section 3 Investing in Equities
and Options Visual Summary
3
Chapter Intro 1
You have just been hired as a financial planner
to provide advice on how to invest wisely and
effectively. Miguel, your client, is a widower
raising two young children. He wants to be sure
that (1) he will have enough money to send his
children to college, and (2) he will be
financially secure in his retirement. What advice
would you give Miguel? Read Chapter 11 to learn
more about how people can accomplish their
financial goals.
4
Chapter Intro 2
Governments and institutions help participants in
a market economy accomplish their financial goals.
5
Chapter Intro-End
6
Section 1-Preview
Section Preview
In this section, you will learn how the
components of a financial system work together to
transfer savings to investors.
7
Section 1-Key Terms
Content Vocabulary
  • saving
  • savings
  • certificate of deposit
  • financial asset
  • financial system
  • financial intermediary
  • nonbank financial institution
  • finance company
  • premium
  • pension
  • pension fund
  • risk

Academic Vocabulary
  • sector
  • compensation

8
Section 1
Have you ever thought about what your financial
goals are and what steps you need to take to
reach them? A. Yes, often B. Occasionally C. Neve
r
  1. A
  2. B
  3. C

9
Section 1
Savings and the Financial System
  • Savingabsence of spending
  • Savingsdollars that are available once you
    abstain from consumption

10
Section 1
Saving and Economic Growth
The financial system brings savers and borrowers
together and helps the economy grow.
11
Section 1
Saving and Economic Growth (cont.)
  • Saving makes economic growth possible.
  • Individuals save by
  • Opening a savings account
  • Purchasing a bond
  • Purchasing a certificate of deposit

Overview of the Financial System
12
Section 1
Saving and Economic Growth (cont.)
  • Documents are given in each case showing money
    savedfinancial assets.
  • The economy has a financial system to transfer
    savings to investors.

Overview of the Financial System
13
Section 1
Saving and Economic Growth (cont.)
  • Three parts to the financial system
  • Funds a saver transfers to a borrower
  • Financial assets that certify conditions of the
    loan
  • Organizations that bring the surplus funds and
    financial assets together

Overview of the Financial System
14
Section 1
Saving and Economic Growth (cont.)
  • Financial intermediariesinstitutions that lend
    funds savers provide
  • Governments and businesses are the largest sector
    of borrowers.
  • Households and businesses are the biggest sources
    of funds.

Overview of the Financial System
15
Section 1
In the financial system, who really
benefits? A. Savers B. Borrowers C. Everyone D. No
one
  1. A
  2. B
  3. C
  4. D

16
Section 1
Nonbank Financial Intermediaries
Organizations other than banks can transfer money
from savers to borrowers.
17
Section 1
Nonbank Financial Intermediaries (cont.)
  • Another group of financial intermediaries are the
    nonbank financial institutions.
  • Finance company
  • Life insurance companiescharge a premium
  • Pension fundpays a pension to specified
    individuals for specific reasons

Profiles in EconomicsSallie Krawcheck
18
Section 1
Which entity would charge you a higher interest
rate for your car loan? A. Bank B. Credit
union C. Finance company D. Relative
  1. A
  2. B
  3. C
  4. D

19
Section 1
Basic Investment Considerations
Investors should consider several factors before
investing their money.
20
Section 1
Basic Investment Considerations (cont.)
  • Before investing, consider the following
  • Consistency
  • Simplicity

The Power of Compound Interest
21
Section 1
Basic Investment Considerations (cont.)
  • The risk-return relationship
  • Riskdegree to which outcome is uncertain but a
    probable outcome can be estimated
  • Investment objectives

Risk and Return
22
Section 1
An investment that appears too good to be true
probably is worth the risk. A. True B. False
  1. A
  2. B

23
Section 1-End
24
Section 2-Preview
Section Preview
In this section, you will learn about the
characteristics of various investments to help
with your investments.
25
Section 2-Key Terms
Content Vocabulary
  • money market
  • primary market
  • secondary market
  • bond
  • coupon rate
  • maturity
  • par value
  • current yield
  • junk bond
  • municipal bond
  • tax-exempt
  • savings bond
  • beneficiary
  • Treasury note
  • Treasury bond
  • Treasury bill
  • Individual Retirement Account (IRA)
  • capital market

26
Section 2-Key Terms
Academic Vocabulary
  • offset
  • presumed

27
Section 2
What determines the price and yield of a
bond? A. Risk of investment B. Supply and demand
C. Current interest rates
  1. A
  2. B
  3. C

28
Section 2
Bonds as Financial Assets
A bond is a long-term investment, with the price
determined by supply, demand, and the buyers
assessment of repayment risk.
29
Section 2
Bonds as Financial Assets (cont.)
  • Governments and businesses issue a bond when they
    need to borrow funds for long periods.
  • Bonds have three main components
  • Coupon rate
  • Maturity
  • Par value

Bond Ratings
30
Section 2
Bonds as Financial Assets (cont.)
  • To compare bonds, investors compute the bonds
    current yield.
  • Interest received and price paid determines the
    actual current yield of each bond.
  • Bond ratings are published by Standard Poors
    and Moodys.

Bond Ratings
31
Section 2
Bonds as Financial Assets (cont.)
  • Bonds rated on
  • Basic financial health of the issuer
  • Expected ability to make future coupon and
    principal payments
  • Issuers past credit history
  • Bonds with higher ratings sell at higher prices
    than bonds with lower ratings.

Bond Ratings
32
Section 2
Which of the following rated bonds has the
greatest risk? A. BBB or Baa B. CCC or Caa C. CC
or Ca
  1. A
  2. B
  3. C

33
Section 2
Financial Assets and Their Characteristics
Investments include CDs, bonds, bills, and IRAs,
all of which vary in cost, maturity, and risk.
34
Section 2
Financial Assets and Their Characteristics
(cont.)
  • Investors today have many choices.
  • Certificates of depositloans investors make to
    financial institutions
  • Corporate bondsIRS considers interest and
    payments as taxable income.
  • Junk bondsoffer high rate of return due to
    exceptionally high risk

35
Section 2
Financial Assets and Their Characteristics
(cont.)
  • Municipal bondsissued by state and local
    governments, generally tax exempt
  • Government Savings Bondssavings bonds are
    paper-based or paperless
  • Bonds can be purchased for investors heirs by
    designating a beneficiary.

36
Section 2
Financial Assets and Their Characteristics
(cont.)
  • Treasury notesU.S. government borrows funds for
    2 to 10 years
  • Treasury bondsU.S. government borrows funds for
    10 to 30 years
  • Treasury bills(T-bills) short term obligations,
    maturity of 4, 13, or 26 weeks
  • Individual Retirement Account (IRAs)

37
Section 2
Which of the following could you invest in
today? A. Savings bonds B. IRA C. T-bill D. 401(k
) plan
  1. A
  2. B
  3. C
  4. D

38
Section 2
Markets for Financial Assets
Financial assets are grouped into different
markets depending on their maturity and
liquidity.
39
Section 2
Markets for Financial Assets (cont.)
  • Markets for financial assets
  • Capital marketmoney is loaned for more than one
    year.
  • Money marketmoney is loaned for periods less
    than one year.

Financial Assets and Their Markets
40
Section 2
Markets for Financial Assets (cont.)
  • Primary marketoriginal issuer can sell or
    repurchase a financial asset.
  • Secondary marketexisting financial assets can be
    resold to new owners.

Financial Assets and Their Markets
41
Section 2
Under which financial market(s) would Disney
bonds with maturity in 5 years be
classified? A. Money market B. Capital market
C. Primary market D. Secondary market
  1. A
  2. B
  3. C
  4. D

42
Section 2-End
43
Section 3-Preview
Section Preview
In this section, you will learn more about the
equities, or stocks, that are traded in markets.
44
Section 3-Key Terms
Content Vocabulary
  • equities
  • stockbroker
  • Efficient Market Hypothesis (EMH)
  • portfolio diversification
  • mutual fund
  • net asset value (NAV)
  • 401(k) plan
  • stock exchange
  • securities exchange
  • over-the-counter market (OTC)
  • Dow Jones Industrial Average (DJIA)
  • Standard Poors 500 (SP 500)

45
Section 3-Key Terms
Content Vocabulary (cont.)
  • bull market
  • bear market
  • spot market
  • futures contract
  • option
  • call option
  • put option

46
Section 3-Key Terms
Academic Vocabulary
  • prospects
  • implication

47
Section 3
Do you think investing is a wise decision? A. Yes
B. No
  1. A
  2. B

48
Section 3
Stocks and Efficient Markets
Investors can purchase stock through stockbrokers
on exchanges, through mutual funds, or through
401(k) plans.
49
Section 3
Stocks and Efficient Markets (cont.)
  • Equities or shares of common stock represent
    another financial asset for investors.
  • Ways to purchase equities
  • Stockbroker
  • Internet account with discount brokerage firm

A New York Stock Exchange Listing
50
Section 3
Stocks and Efficient Markets (cont.)
  • Mutual funds
  • Net asset value (NAV)
  • 401(k) plan

A New York Stock Exchange Listing
51
Section 3
Stocks and Efficient Markets (cont.)
  • Value of stock depends on
  • Number of outstanding shares to be traded
  • Companys profitability
  • Expectations of growth

52
Section 3
Stocks and Efficient Markets (cont.)
  • Efficient Market Hypothesis (EMH) states that
    each stock is analyzed constantly by many
    professional analysts. Any observations result in
    buying or selling of the stock immediately.
  • Portfolio diversificationinvestors offset losses
    of one stock with increases in other stocks.

How Much Money Will You Have at Retirement?
53
Section 3
Which is not an advantage of investing in a
401(k)? A. Analysts on staff to monitor market
conditions B. Highly diversified C. Employers
typically match a portion of employees contrib
ution D. Penalties for early withdrawal
  1. A
  2. B
  3. C
  4. D

54
Section 3
Stock Markets and Their Performance
Several different stock markets exist, and each
is organized in a different way
55
Section 3
Stock Markets and Their Performance(cont.)
  • Historically, stocks were traded at a stock or
    securities exchange.
  • New York Stock Exchange (NYSE) is the oldest
    exchange in the United States.
  • American Stock Exchange (AMEX) is also in New
    York City.

56
Section 3
Stock Markets and Their Performance(cont.)
  • Regional exchanges located in several big cities
    across the United States
  • Exchanges in major Cities throughout the world
  • Majority of stocks, however, are traded in an
    over-the-counter market (OTC).
  • The NASDAQ is the worlds largest electronic
    stock market.

57
Section 3
Stock Markets and Their Performance(cont.)
  • Stock performance can be monitored by several
    popular indicators.
  • Dow Jones Industrial Average (DJIA)
  • Standard Poors 500 (SP 500)
  • NASDAQ Composite

58
Section 3
Stock Markets and Their Performance(cont.)
  • Bull marketstrong, prices moving up
  • Bear marketmean or nasty market with prices
    falling sharply

59
Section 3
Is it more advantageous to purchase stocks in a
bear or bull market? A. Bear B. Bull C. Does not
matter
  • A
  • B
  • C

60
Section 3
Trading in the Future
Financial assets can be bought and sold in the
future as well as the present.
61
Section 3
Trading in the Future (cont.)
  • Most buying and selling takes place immediately,
    a spot market.
  • Exchanges that take place later in time are a
    futures contract.
  • Optionbuyer has the right to cancel futures
    contract.
  • Call optionpurchase
  • Put optionsell

62
Section 3
The total number of stocks listed on the
NASDAQ A. is less than the total on the NYSE
but greater than the total on the AMEX. B. is
greater than the total on the NYSE and the
AMEX. C. is less than the total on the AMEX but
greater than the total on the NYSE.
  1. A
  2. B
  3. C

63
Section 3-End
64
VS 1
Financial System Households and businesses
invest their surplus funds to earn interest.
Governments and businesses invest this money for
economic growth.
65
VS 2
Investment Risk and Return Investors must weigh
the risks of their investments against the
returns they expect. Generally, the higher the
risk of an investment, the higher the return
investors require.
66
VS 3
Equities and Futures The riskiest investments
consist of equities and futures. Equities can be
purchased as individual stocks, or as a part of a
mutual fund or 401(k) plan. Futures allow
investors to speculate on future prices of
commodities.
67
VS-End
68
Figure 1
69
Figure 2
70
Figure 3
71
Figure 4
72
Figure 5
73
Figure 6
74
Figure 7
75
Profile
Sallie Krawcheck (1965 )
  • chief financial officer for Citigroup Inc., the
    worlds largest financial institution
  • ranked number 6 on Forbess top 100 of The
    Worlds Most Powerful Women for 2006

76
DFS Trans 1
77
DFS Trans 2
78
DFS Trans 3
79
Vocab1
saving absence of spending that frees resources
for use in other activities or investments
80
Vocab2
savings the dollars that become available for
investors to use when others save
81
Vocab3
certificate of deposit document showing that an
investor has made an interest-bearing loan to a
financial institution
82
Vocab4
financial asset a stock or other document that
represents a claim on the income and property of
the borrower, such as a CD, bond, Treasury bill,
or mortgage
83
Vocab5
financial system network of savers, investors,
and financial institutions working together to
transfer savings for investment uses
84
Vocab6
financial intermediary institution that channels
savings to investors
85
Vocab7
nonbank financial institution nondepository
institution that channels savings to investors
86
Vocab8
finance company firm that makes loans directly to
consumers and specializes in buying installment
contracts from merchants who sell on credit
87
Vocab9
premium price paid at regular intervals for an
insurance policy
88
Vocab10
pension regular payments to someone who has
worked a certain number of years, reached a
certain age, or has suffered an injury
89
Vocab11
pension fund fund that collects and invests
income until payments are made to eligible
recipients
90
Vocab12
risk situation in which the outcome is not
certain, but the probabilities can be estimated
91
Vocab13
sector an area of the economy in which businesses
offer the same or similar products or services
92
Vocab14
compensation something, such as money, given or
received as an equivalent for goods or services,
injury, debt, or high risk
93
Vocab15
bond contract to repay borrowed money and
interest on the borrowed money at regular future
intervals
94
Vocab16
coupon rate stated interest on a corporate,
municipal, or government bond
95
Vocab17
maturity life of a bond or length of time funds
are borrowed
96
Vocab18
par value principal of a bond or total amount
borrowed
97
Vocab19
current yield bonds annual coupon interest
divided by purchase price measure of a bonds
return
98
Vocab20
junk bond bond that carries an exceptionally high
risk of nonpayment and a low rating
99
Vocab21
municipal bond bond, often tax exempt, issued by
state and local governments
100
Vocab22
tax-exempt not subject to tax by federal or state
governments
101
Vocab23
savings bond low-denomination, non-transferable
bond issued by the federal government
102
Vocab24
beneficiary person designated to take ownership
of an asset if the owner of the asset dies
103
Vocab25
Treasury note U.S. government bond with a
maturity of 2 to 10 years
104
Vocab26
Treasury bond U.S. government bond with maturity
of 10 to 30 years
105
Vocab27
Treasury bill short-term United States government
obligation with a maturity of one year or less in
denominations of 1,000
106
Vocab28
Individual Retirement Account (IRA) retirement
account in the form of a long-term time deposit,
with annual contributions not taxed until
withdrawn during retirement
107
Vocab29
capital market market in which financial capital
is loaned and/or borrowed for more than one year
108
Vocab30
money market market in which financial capital is
loaned and/or borrowed for one year or less
109
Vocab31
primary market market in which only the original
issuer can sell or repurchase a financial asset
110
Vocab32
secondary market market in which financial assets
can be sold to someone other than the original
issuer
111
Vocab33
offset to balance higher levels of risk with a
larger payoff
112
Vocab34
presumed taken for granted supposed
113
Vocab35
equities stocks that represent ownership shares
in corporations
114
Vocab36
stockbroker person who buys or sells securities
for investors
115
Vocab37
Efficient Market Hypothesis (EMH) argument that
stocks are always priced about right because they
are closely watched
116
Vocab38
portfolio diversification strategy of holding
different investments to protect against risk
117
Vocab39
mutual fund company that sells stock in itself
and uses the proceeds to buy stocks and bonds
issued by other companies
118
Vocab40
net asset value (NAV) the market value of a
mutual fund share found by dividing the net value
of the fund by the number of shares issued
119
Vocab41
401(k) plan tax-deferred investment and savings
plan that acts as a personal pension fund for
employees
120
Vocab42
stock exchange physical place where buyers and
sellers meet to exchange securities
121
Vocab43
securities exchange physical place where buyers
and sellers meet to exchange securities
122
Vocab44
over-the-counter market (OTC) electronic
marketplace for securities not listed on
organized exchanges such as the New York Stock
Exchange
123
Vocab45
Dow Jones Industrial Average (DJIA) measure of
stock market performance based on 30
representative stocks
124
Vocab46
Standard Poors 500 (SP 500) measure of stock
market performance based on 500 stocks traded on
the NYSE, AMEX, and OTC market
125
Vocab47
bull market period during which stock market
prices move up for several months or years in a
row
126
Vocab48
bear market period during which stock market
prices move down for several months or years in a
row
127
Vocab49
spot market market in which a transaction is made
immediately at the prevailing price
128
Vocab50
futures contract an agreement to buy or sell at a
specific date in the future at a predetermined
price
129
Vocab51
option futures contract giving a buyer the right
to cancel the contract
130
Vocab52
call option futures contract giving a buyer the
right to cancel a contract to buy something
131
Vocab53
put option futures contract giving a buyer the
right to cancel a contract to sell something
132
Vocab54
prospects potential or expectations
133
Vocab55
implication something suggested to be naturally
understood
134
Help
To use this Presentation Plus! product
Click the Forward button to go to the next
slide. Click the Previous button to return to the
previous slide. Click the Home button to return
to the Chapter Menu. Click the Transparency
button from the Chapter Menu, Chapter
Introduction, or Visual Summary slides to access
the Economic Concepts transparencies that are
relevant to this chapter. From within a section,
click on this button to access the relevant Daily
Focus Skills Transparency. Click the Return
button in a feature to return to the main
presentation. Click the Economics Online button
to access online textbook features. Click the
Reference Atlas button to access the Interactive
Reference Atlas. Click the Exit button or press
the Escape key Esc to end the chapter slide
show. Click the Help button to access this
screen. Links to Presentation Plus! features such
as Graphs in Motion, Charts in Motion, and
figures from your textbook are located at the
bottom of relevant screens.
135
End of Custom Shows
This slide is intentionally blank.
About PowerShow.com