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Unit 4: Financial Sector

AP Macroeconomics — Note Packet

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Key Terms

Stocks

Represents _ in a company; generally higher potential returns but also higher __________. (0:00)

Bonds

A _ you give to a company or government, promising regular __________ payments. Generally lower risk and lower potential returns. (0:00)

Liquidity

How easily an asset can be turned into _ without losing significant __________. (0:00)

Nominal Interest Rate

The '_ __________' rate you actually pay or earn, before accounting for inflation. (0:02)

Real Interest Rate

The true return or cost of borrowing/lending _ accounting for __________. (0:02)

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