call provision - ANS a provision in a bond contract that gives the issuer the right to redeem the
bonds under specified terms prior to the normal maturity date
common stock - ANS basic form of corporate ownership
convertible securities - ANS Companies may issue bonds or preferred stock that contains a
conversion feature. Such bonds or stock are called convertible securities. This feature gives the
bondholder or preferred stockholder the right to exchange the bond or preferred stock for a fixed
number of shares of common stock.
debenture - ANS Unsecured bonds. Backed by the financial health and reputation of the issuer.
Federal Deposit Insurance Corporation (FDIC) - ANS federal agency that insures deposits at
commercial and savings banks
Federal Open Markets Committee (FOMC) - ANS sets most policies concerning monetary policy
and interest rates. It consists of 12 members—the seven Fed board governors plus five
representatives of the district banks, who serve on a rotating basis.
Federal Reserve System (Fed) - ANS central bank of the United States
financial institution - ANS intermediary between savers and borrowers, collecting funds from
savers and then lending the funds to individuals, businesses, and governments
financial market - ANS market in which securities are issued and traded
financial system - ANS process by which money flows from savers to users
government bonds - ANS bonds sold by the U.S. Department of the Treasury. Mature in 10
years or fewer from date of issue.
initial public offering (IPO) - ANS When a company offers stock for sale to the general public for
the first time
insider trading - ANS use of material nonpublic information about a company to make
investment profits
investment-grade bond - ANS a bond rated A or BBB; many banks and other institutional
investors are permitted by law to hold only bonds rated investment grade or better
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