Conflicts of Interest: This occurs when a company is involved in multiple interest or jobs, one which couple possibly corrupt the motivation for any act in the other.
Incentives: Incentives help things get done faster in the financial world. They might receive something extra forgetting a job done or getting something through the system faster
Investor Confidence: The measure of investor or consumer optimism or pessimism with respect to the economy in the near future.
Regulation: The act of watching over certain practices to ensure thaey are consistent with the current laws. Regulating an economy the size of the US is a very tough job because there are so many companies that have a range of different purposes
Securities: A security is essentially a contract that can be assigned a value and traded. THe most common form of securities are stocks and bonds.
SEC: A government commission created by Congress to regulate the securities markets and protect investors. In addition to regulation and protection, it also monitors the corporate takeovers in the U.S.
Stockholders: A holdr or owner of stock in a corporation, in hopes that it brings future growth therefore the stock will appreciate in value. The goal of owning stock is to sell at a later date for more that you paid for it.
Default: The failure to promptly pay interest or principal when due. Default occurs when a debtor is unable to meet the legal obligation of debt repayment. Borrowers may default when they are unable to make the required payment or unwilling to honor the debt.
Fannie Mae-Federal National Mortgage Association- (FNMA): A government-sponsored enterprise (GSE) that was created in 1938 to expand the flow of mortgage money by creating a secondary mortgage market. Fannie Mae is a publicly traded company which operates under a congressional charter that directs Fannie Mae to channel its efforts into increasing the availability and affordability of home ownership for low-, moderate-, and middle-income Americans.
Freddie Mac-Federal Home Loan Mortgage Corp- (FHLMC): A stockholder-owned, government-sponsored enterprise (GSE) chartered by Congress in 1970 to keep money flowing to mortgage lenders in support of homeownership and rental housing for middle income Americans. The FHLMC purchases, guarantees and securitizes mortgages to form mortgage-backed securities. The mortgage-backed securities that it issues tend to be very liquid and carry a credit rating close to that of U.S. Treasuries.
Monetary Reserve: A nation's assets in foreign currency and/or commodities like gold and silver, which are used to back up the national currency. Monetary reserves also provide a cushion for executing central banking functions like adding to the money supply and settling foreign exchange contracts in local currencies.
Mortgage-Backed Securities (MBS): A type of asset backed security that is secured by a mortgage or collection of mortgages. These securities must also be grouped in one of the top two ratings as determined by a accredited credit rating agency, and usually pay periodic payments that are similar to coupon payments. Furthermore, the mortgage must have originated from a regulated and authorized financial institution.
Sub-prime Loan: A type of loan that is offered at a rate above prime to individuals who do not qualify for prime rate loans. Quite often, sub-prime borrowers are often turned away from traditional lenders because of their low credit ratings or other factors that suggest that they have a reasonable chance of defaulting on their debt payment.
Treasury Bond: A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest payments semi-annually and the income that holders receive is only taxed at the federal level.
Trade Deficit: An economic measure of a negative balance of treade in which a country's imports exceeds its exports. A trade deficit represents an outflow of domestic currency to foreign markets.
Trade Surplus: An economic measure of a positive balance of trade, where a country's exports exceeds its imports. A trade surplus represents a net inflow of domestic currency from foreign markets, and is the opposite of a trade deficit.
Source: www.investopedia.com
