adjustable rate mortgagebear market: an extended period of general price declines in the securities marketbond: a long-term promissory note that obligates the borrower to make specified payments over a specific period of time. Bonds vary widely in maturity, security and type of issuer, although most are sold in $1,000 denominations.bull market: an extended period of general price increases in the securities market.business cyclecapital gain: The excess by which proceeds from the sale of a capital asset exceeds the cost.Consumer Price Index (CPI): a measure of the average change over time in the prices paid by urban consumers for a fixed “market basket” of day-to-day expenses (including food, automobile registration, clothing, etc.)correction: reverse movement in the price of an individual stock, bond, commodity or index after any long-term move. Can be a movement up or down, but usually refers to a fall in the price.credit rating: A grading of a borrower’s ability to meet financial obligations in a timely manner.default risk: Risk that a particular debtor will fail to make timely payments of interest and principal. Interest rates on a debt instrument rise as the default risk increases.depressionfederal funds rate: The rate of interest, determined by the Federal Reserve, on overnight loans of excess reserves among commercial banks. A declining federal fund rate may indicate the Federal Reserve has decided to stimulate the economy by making it cheaper for one bank to borrow from another.Federal Reservehedge fund: A very specialized, volative investment company (mutual fund) that permits the manager to use a variety of investment techniques normally prohibited in other types of funds. These techniques are borrowing money, selling short and utilizing options. These funds offer extraordinary gains with above-average risk.gross national productinflationinterest rate: A measure of the cost of credit, expressed as a percent.Keynesian economics: The economic philosophy espoused by John Maynard Keynes that advocated an active government role in maintaining the economy.misery index: an index that considers both inflation and unemployment rates.panicrecession: an economic downturn marked by two consecutive quarters of declines in the gross national product.stagflationstandard of livingsubprime loans: Loans that are given to borrowers who have credit problems. Subprime loans typically have higher interest rates than those given to borrowers with a clear credit history.supply and demandsupply-side economicsunemployment
