1.  A.Store of value  B.Bartering  C.Medium of exchange  D.Standard of value

2.  A.Customers can store money  B.Customers can earn money  C.Customers can borrow money  D.All of the above

3.  A.Allowing banks to have more than one reserve for depositors’ money  B.Keeping a certain amount of money in banks so that they can pay depositors if they request their money  C.The type of banking used only in other countries

4.  A.Losing interest on an account  B.Lollipops for children at drive-throughs  C.Gaining interest on an account  D.Allowing others to borrow their money

6. Remember this? Corporations raise money through stocks and bonds Most stocks are resold to investors through a stock exchange. Oldest and largest organized stock exchange- New York Stock Exchange (NYSE) The centralized computer system that allows people to make trades online- NASDAQ

7. Most people buy stocks as a financial investment, hoping that stock price will rise and they will be able to resell the stock for a profit. Gains made from the sale of securities are called capital gains.

8.  Dividend payments- corporation profits paid back to stockholders.  Capital gains- selling the stock at a price greater than the purchase price.

9.  Common stock- share of ownership in a corporation, giving holders voting rights and a share of profits.  Preferred stock- share of ownership in a corporation giving holders a share of profits (paid before common stockholders) but no voting rights.  Most people choose common stock.

10.  Stockbrokers buy and sell stocks for customers for a commission.

11.  Stock index- measures the performance of many individual stocks and the stock market as a whole  Most well-known: Dow Jones Industrial Average (“The Dow”)  Bull market- stock market prices rise steadily over a relatively long period of time.  Bear market- stock market prices decline steadily over a relatively long period of time.

12.  You’re not buying a stock, you’re buying a company.  The only reason you buy a stock is because the company is making a profit.  If you buy a stock when the company isn’t making a profit, then you’re not investing; your speculating.  Even if your philosophy is “buy and hold for the long term,” continue to monitor your stocks and consider selling them if they’re not appreciating or if general economic conditions have changed.

13.  When you buy a stock, you buy part ownership (although a very small part) in a publicly-traded company. Stocks make money if you buy low and sell high, and can also earn income when the company pays out a share of its profits to its owner/stockholders (called dividends). Advantage- If your stock does well you can make a lot of money. Disadvantage- Putting all your money in a single stock is risky. If your stock does poorly, you can lose a lot of money.

14.  Mutual funds are, in the simplest terms, collections of stocks, bonds and other investment securities that are managed by a financial expert to maximize gain. These funds often contain stocks and bonds from many different companies Advantage- Mutual funds are more stable because you are investing in several companies instead of just one. So if company A goes bad, company B and C may still be doing well enough so that you do not lose money. Disadvantage- Interest rates are typically lower than single stocks.

15.  Bonds, on the other hand, are like formalized loans that investors offer to businesses and government agencies. Bonds do not offer corporate ownership of any kind, but often offer regular interest payments (called coupons) and/or full repayment at the end of the bond (loan) term. Advantage- There is no or little risk in bonds. Your interest rate is fixed so you are guaranteed to earn money. Disadvantage- Interest rates on bonds are lower than stocks and mutual funds.

16. __________________ The least risky but the lowest interest rate _________________ The most risky but can have a very high interest rate at times _________________ Moderately risk that is spread out among companies, moderate interest can be earned