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Chapter 8
Investing
41
Business
12th Grade
11/03/2014

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Term
Back end load
Definition
Fees paid to the mutual fund company when selling a mutual fund.
Term
Dividends
Definition
Quarterly payouts of profits by a company to all shareholders.
Term
Expense Ratios
Definition
For a mutual fund, an annual percentage the fund takes as payment. Expense ratios of different funds can be compared to find the best value.
Term
FDIC insured
Definition
The FDIC (Federal Deposit Corporation) is a government agency that insures depositors' money. Banks and savings and loan companies that are FDIC-insured pay a percentage of their deposits to the FDIC to pay for the insurance.
Term
Front end load
Definition
Fees paid to the mutual fund company as an entry requirement into certain mutual funds.
Term
Inflation
Definition
Rise in prices that effectively makes cash have less buying power.
Term
Savings account
Definition
A safe, low-return investment available from banks. There is generally no minimum deposit for this type of account, making it perfect for kids and teens just starting out.
Term
Year to date return (YTD)
Definition
On a mutual fund statement, a comparison of how the fund has done compared to its value on the first of the year
Term
Yield
Definition
For a savings account, the percentage of interest earned annually. For a stock, the annual dividend divided by the share price.
Term
Asset class
Definition
Separate types of investments, such as stocks/stock mutual funds, bonds/bond funds, money market accounts, and international stocks/international stock funds. Each asset class has typical risks and returns, and a certain investment within that class may perform better or worse than its peers.
Term
Capital gain
Definition
When you sell a stock for more than you paid for it, the difference is called a capital gain. Capital gains are income that must be reported on taxes.
Term
Capital loss
Definition
When what you sell a stock for is less than what you originally paid for the stock, the difference is called a capital loss.
Term
Common stock
Definition
A share in a company's assets and profits. The ownership of a publicly traded company is split up into the shares of stock being traded and held.
Term
dividend
Definition
Money paid by a corporation to each shareholder. Typically given four times a year, these distributions of company profits can be used to reinvest in more shares of the company.
Term
Money market
Definition
A mutual fund or account that invests in short-term, liquid investments. These funds generally pay better than a savings account with a bank, but less than a typical stock mutual fund, These funds are considered very low risk.
Term
A mutual fund
Definition
A mutual fund is a pool of stocks, bonds, and other securities managed by an investment company. Individuals can buy shares of the fund an d profit from its investment gains.
Term
Private corporation
Definition
An incorporated business that does not trade shares of stock on an open market. It is owned privately, typically by a small number of people.
Term
Public corporation
Definition
An incorporated business owned jointly by all stockholders. Stockholders vote on who will oversee the company as a Board or Directors. Usually, the company profits are paid out in the form of dividends.
Term
Rate of return
Definition
The annual amount of money an investment makes, given as a percentage. For example, a $100 investment that is worth $112 the next year had a 12% return
Term
Risk
Definition
The chance that an investment may lose value. Less risky investments have a lower rate of return.
Term
Return
Definition
Monetary increase that an investment makes. If an investment loses value, it is called a negative return.
Term
Bear market
Definition
A time with generally falling stock prices
Term
Blue chip stock
Definition
Stocks issued by solid and reliable companies with long records of growth and stability. These stocks usually pay small but reliable dividends and maintain a steady stock price
Term
Diversification
Definition
The practice of dividing the money a person invest between several different types of investments in order to lower risk
Term
Investing
Definition
The process of setting money aside to increase wealth over time for long-term financial goals such as retirement
Term
Investment
Definition
Account of arrangement in which a person puts his/her money for long-term growth: invested money should not be used for a suggested minimum of five years
Term
Liquidity
Definition
Quality of an asset that permits it to be converted quickly into cash without loss of value; availability of money
Term
Portfolio
Definition
A list of your incestments
Term
Risk
Definition
Degree of uncertainty of return on an asset; in business, the likelihood of loss or reduced profit
Term
Risk-return Ratio
Definition
Relationship of substantial reward compared to the amount of risk taken
Term
Share
Definition
Piece of ownership in a company, mutual fund or other investment
Term
Stocks
Definition
Securities that represent part ownership or equity in a corporation
Term
Tax-favored dollar
Definition
Money that is invested, either tax deferred or tax free, within a retirement plan
Term
Bonds
Definition
Money loaned to the government, corporations, or municipalities that pays the investor interest. Different types of bonds can be more or less risky, and bonds can have high yields or low yields.
Term
Bull Market
Definition
A time with generally rising stock prices
Term
Defensive stock
Definition
Stocks of companies that produce such staples as food, beverages, and pharmaceuticals, and insurance companies. These businesses may not grow enormously fast, but they should keep their value relatively constant
Term
Growth Stock
Definition
Stocks of companies that generally do not pay dividends or pay only very small dividends. These companies plow their profits back into growing the business. They can be new and entrepreneurial companies, and can experience high growth or financial failure
Term
Investment Portfolio
Definition
The collection of investments you personally hold, including stocks, bonds, money market accounts, and savings accounts.
Term
Large-Cap Stock
Definition
Stocks of very large companies such as WalMart, General Electric, and IBM, that have a market capitalization of between $10 billion and $200 billion.
Term
Personal Investing Plan
Definition
A collection of investments tailored to your i vestment risk tolerance and time horizon. Any plan only works as well as your ability to stick with it, including sometimes selling "winners" to keep your overall spread of investments to where you want to be.
Term
Small-Cap Stock
Definition
Stocks of largely unknown companies with smaller market capitalization, that is, dollar value of total stock ownership. Small-Cap stocks generally have a market capitalization of between $300 million and $2 billion.
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