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| is the reduction of risk by spreading investment dollars over numerous stocks and or bonds to minimize the impact should one of the investments turn bad |
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| earnings from a mutual fund account automatically buys more shares of the fund. this is a way to use profits to build your stake in the fund. you do still have to pay taxes on the earnings in most cases |
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| is investing in a fixed amount on regular basis in a mutual fund, usually monthly and through an automatic debit to your bank account. this investment method means you buy few shares when prices are high and more when prices are lower, resulting in an overall lower average cost |
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| is the daily value of a mutual fund that includes all the assets minus the fund's liabilities converted to a per-share price. this is the price you buy and sell mutual fund shares at if you deal directly with the company |
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| is a fund that trades on stock exchanges like common stock. a fixed number of shares are issued and the value of the fund is more a function of supply and demand, unlike open end fun, which can issue more shares to accommodate new investors |
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| make up the largest number of funds on the market. they simply issue new shares when someone wants to buy into the fund, rather than matching an existing shareholder who wants to sell |
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| result when an asset is sold for profit. in the case of a mutual fund, that asset may be a stock, bond, or a fixed income security. if the asset has been held for less than one year, it is a short term ____. if it was held more than a year, it's a long-term ___. |
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| actively managed mutual funds |
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| are open-end funds that employ a portfolio manger who buys and sells stocks and bonds in an attempt to post a better return than the market, usually represented by some stock index, such as the S&P 500. |
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| include the index funds where managers buy stocks or bonds that match the composition of popular stock and bond indexes, such as the S&P 500 and the Dow Jones Industrial Average |
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| is the number of shares outstanding multiplied by the per share price. for example, a company with 100 million shares on the market and a per share price of $55 would have a _____ of $5.5 billion |
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| are a special type of stock that companies issue. they have limited rights when it comes to voting on company business, but they do pay a steady dividend and that's what attracts investors. the stock's price may not rise (or fall) nearly as fast or as far as the common stock. Income investors like ____ from solid companies for its dependability |
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| the percentage of your portfolio occupied by stocks and bonds. because bonds are considered more conservative, investors use a higher ratio of bonds for a less aggressive market position and a higher ratio of stocks for a more aggressive position |
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| tax-free money market funds |
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| invest in securities that generate tax-free income. in most cases, only investors in the highest income tax brackets should invest in these funds because the return is very low |
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| manager believes in beating the market through careful stock selection and bargain hunting. the manager of this will often trade actively in pursuit of a better return than a major index can provide |
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| relies on the natural returns of the underlying index and doesn't tinker with the established system. they are almost always index funds. |
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| are online tools that investors use to narrow down possible investment candidates. despite its name, you can also use the tool to sort through mutual funds and find those that match a set of criteria you select |
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| a legal document that must accompany any request for information about purchasing a mutual fund. the Securities and Exchange Commission requires fund companies to use "plain English" in composing it so that people can understand what it is saying without an accounting or law degree. |
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| market capitalization or market cap |
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| is calculated by multiplying all of a company's outstanding shares (those shares available for trade on the stock exchange), by the current per share price |
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| of an investment in a mutual fund includes any dividens, capital gains distributions, and interest income. this is the appropriate number to consider. it should be noted that this is also a pre-tax return |
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| is one of the three major national exchanges, although it doesn't get as much attention from the general public as the New York Stock Exchange or the Nasdaq. the exchange trades ETFs, options, and other sophisticated securities in addition to shares of common stock |
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| is a mutual fund or exchange traded fun that is broad based and central to an investor's investment strategy. the investor will plan an investment to hold and not trade |
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