AP®︎ Macroeconomics: Topic 4.1 Flashcards

Master key terms and definitions for Topic 4.1 of AP Macroeconomics – Financial Assets to help you prep for quizzes and the AP exam.

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Term

Liquidity

Definition

The ease with which an asset can be converted into cash quickly.

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Liquidity
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The ease with which an asset can be converted into cash quickly.

MEA-3.A
Rate of Return
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The gain or loss on an investment over a specific period.

MEA-3.A
Risk
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The chance an investment's actual return will differ from its expected return.

MEA-3.A
Cash and Demand Deposits
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The most liquid forms of money; cash is physical currency, deposits are checking-account funds.

MEA-3.AMEA-3.A.1
Bond
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An interest-bearing asset representing a loan to a government or business.

MEA-3.AMEA-3.A.2
Stock
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An equity asset that represents partial ownership in a corporation.

MEA-3.AMEA-3.A.2
Bond Prices and Interest Rates
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Previously issued bond prices and market interest rates move in opposite directions.

MEA-3.AMEA-3.A.3
Opportunity Cost of Holding Money
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The forgone interest that could have been earned by holding other financial assets.

MEA-3.AMEA-3.A.4
Previously Issued Bond
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A bond already sold once that can later be resold to another buyer.

MEA-3.AMEA-3.A.3