Investment Vocabulary Terms – Flashcards
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analyst
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an expert who studies financial data (on credit or securities or sales or financial patterns etc.) and recommends appropriate business actions
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asset allocation
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An investment strategy that aims to balance risk and reward by apportioning a portfolio's assets according to an individual's goals, risk tolerance and investment horizon.
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bear market
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A market condition in which the prices of securities are falling or are expected to fall
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blue chip
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well established company with good earnings and regular stock dicidends
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bond
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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
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bull market
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A financial market of a group of securities in which prices are rising or are expected to rise.
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capital
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Financial assets or the financial value of assets, such as cash.
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capital gains
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profits made from selling an asset for greater than purchased price
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capital loss
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the sale of an investment for less than its purchase price
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compounding
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is the process in which interest is earned on both the principal- the amount you deposited-and on any previously earned interest
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diversification
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The act of investing in many different assets rather than just a few so as to reduce risk
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dividend
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payment to shareholders, on a per-share basis, out of the company's earnings
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dollar cost averaging
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A system of buying securities at regular intervals with a fixed dollar amount. If each investment is for the same number of dollars, payments buy more shares when the price is low and fewer when it rises. Over time, and given fluctuating prices, dollar cost averaging will result in a lower average cost than the average price of the stock
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economics
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production and consumption of goods and services
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fixed income security
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An investment that provides a return in the form of fixed periodic payments and the eventual return of principal at maturity
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fund manager
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The person(s) resposible for implementing a fund's investing strategy and managing its portfolio trading activities.
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growth investment
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Type of investment you buy and hold, hoing it will increase in value over time
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income statement
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a summary of income and expenses during a specific period of time; also known as profit and loss statement.
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interest
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a fixed charge for borrowing money
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investing
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The act of committing money or capital to an endeavor (a business, project, real estate, etc.) with the expectation of obtaining an additional income or profit.
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mutual fund
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a regulated investment company with a pool of assets that regularly sells and redeems its shares
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NASDAQ
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National Association of Securities Dealers Automated Quotation system
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pension plan
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Contractual agreement between an employer and its employees for the employer to provide benefits to employees after they retire; expensed when incurred.
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Peter Lynch
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Peter Lynch managed the Fidelity Magellan Fund from 1977 to 1990, during which time the fund's assets grew from $20 million to $14 billion. The greatest investor of all time.
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portfolio
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Consists of all the securities held by an investor.
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principal
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the sum of money owed, not including the interest
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prospectus
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A paper or pamphlet containing information of a proposed undertaking.
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rebalancing
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Realigning the proportions of assets in a portfolio as needed
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registered retirement
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RRSP is an acronym for Registered Retirement Savings Plan. RRSPs are the Canadian government's way of helping citizens save their money for retirement
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savings plan
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putting money aside in a systematic way to help reach a financial goal
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risk
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a chance that has an unknown outcome
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risk tolerance
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The degree of uncertainty that an investor can handle in regard to a negative change in the value of his or her portfolio.
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risk free asset
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an asset with a variance of zero because it has no risk
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speculation
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to engage in business dealings that involve some risk in hopes of making a profit
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stock
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a certificate documenting the shareholder's ownership in the corporation
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stock market
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A system for buying and selling shares of companies
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time horizon
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length of time over which an investment is made or held before it is liquidated.
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value investing
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The strategy of selecting stocks that trade for less than their intrinsic values.
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volatility
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being easily excited
