Flashcards About Essay On Investing
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Common Stocks
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ownership shares in a publicly held corporation. Shareholders have voting rights and may receive dividends; high risk
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401K
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a retirement savings plan funded by *employee contributions* and often matching funds from your employer; contributions are deducted from *pre-taxed* salary and funds grow *tax free* until withdrawn
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Bonds
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A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate; lowest risk
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Real Estate
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A type of investment that includes land and the buildings on it; high risk because of stability of real estate market
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Dividends
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Company's share profits to the shareholders based on the corporation's performance
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Return on Investment
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(ROI) the ratio of money gained or lost on an investment relative to the amount of money invested. (usually stated in percentage form)
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Mutual Fund
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An investment in which investors pool their money to buy stocks, bonds, and other securities selected by professional managers who work for an investment company; moderate-low risk
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return
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the money an investor receives above and beyond the sum of money initially invested
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Investing
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Money used to purchase assets that will potentially grow in value; less liquid; higher risk; higher returns (8-12%)
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risk
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Degree of uncertainty of return on an asset; in business, the likelihood of loss or reduced profit.
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Rate of Return Calculation
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total return divided by the amount of money invested; turn whol nuber into a percent
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Speculative Investments
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A highest-risk investment made in the hope of earning a relatively large profit in a short time; buying and selling assets such as futures (gold, silver, agriculture products), collectibles, and options
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index fund
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Mutual fund that has a portfolio matching that of a broad-based portfolio. This may include the Standard & Poor's 500 Index, indexes of mid- and small-capitalization stocks, foreign stock indexes, or bond indexes.
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Index
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group of similar stocks and bonds
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Brokerage Firm
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facilitates the buying and selling of investments from a stock exchange for a fee; itermediary between the stock exchange and the investor
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Portfolio Diversification
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reduces risk by spreading investment money among a wide array of investments
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Individual Retirement Account
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Tax deferred account to which wage earners can contribute an amount up to a yearly maximum.
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Rule of 72
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The number of years it takes for a certain amount to double in value is equal to 72 divided by its annual rate of interest.
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Maturity Date
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Specified time in the future when the principal amount of the bond is repaid to the bondholder
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Market Price
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The amount a willing buyer will pay a willing seller for a stock.
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Bull Market
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Stock market value goes up
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Bear Market
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Stock market value goes down
