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MFLD MOD3
Module 3 Saving & Investing
| Term | Definition |
|---|---|
| Blue Chip Stock | stocks from nationally recognized companies with long history of profit, dividend payments, and reputation for management. |
| Bond | a form of lending to a company or the government (city, state, or federal). |
| Certificate of Deposit | an insured interest earning savings tool that allows restricted access to the funds. Checking Account |
| Common Stock | shares or units of ownership in a public corporation. |
| Countercyclical Stock | shares of companies which give consistent returns even when the economy is suffering. |
| Cyclical stocks | stocks influenced by changes in the economic business cycle. |
| Dividend | The share of profits distributed in cash. |
| Financial risk pyramid | illustrates the trade-offs between risk and return for a number of saving and investing tools. |
| Growth Stock | stocks are from companies who have consistent record of relatively rapid growth and earnings in all economic conditions. |
| Income Stock | stocks that pay higher than average dividends. |
| Index | a group of similar stocks and bonds. |
| Index fund | a mutual fund that was designed to reduce fees by investing in the stocks and bonds that make up an index. |
| Inflation | the rise in the general level of prices. |
| Inflation risk | the danger that money won’t be worth as much in the future as it is today. |
| Investing | the purchase of assets with the goal of increasing future income. |
| Investment philosophy | an individual’s general approach to investment risk. |
| Investment risk | the possibility that an investment will fail to pay the expected return or fail to pay a return at all. |
| Market price | the current price that a buyer is willing to pay for stock. |
| Maturity date | the specified time in the future when the principal (or initial investment) amount of the bond is repaid to the bondholder. |
| Mutual fund | created when a company combines the funds of many different investors and then invests that money in a diversified portfolio of stocks and bonds. |
| Money Market Deposit Account | a government insured account offered at most depository institutions, which requires minimum account balances and tiered interest. |
| Preferred Stock | shares which pay dividends and have priority over common stock. |
| Portfolio diversification | reduces risk by spreading investment money among a wide array of investment tools. |
| Rate of return | the total return on an investment expressed as a percentage of the amount of money invested. |
| Risk | the uncertainty regarding the outcome of a situation or event. |
| Rule of 72 | allows a person to easily calculate when the future value of an investment will double the principal amount. |
| Savings Account | account to hold money not spent on consumption. |
| Savings Bond | discount bond purchased for 50% of the face value from the U.S. government. |
| Savings Tools | secure and liquid accounts offered by depository Institutions assisting in management of a fund. |
| Speculative investments | have the potential for significant fluctuations in return over a short period of time. |
| Stock | a share of ownership in a company. |
| Stockholder or Shareholder | the owner of a stock. |
| Tax sheltered investments | eliminate, reduce, defer, or adjust the current year tax liability. |
| Value Stock | stocks from companies which have a low market price considering historical earnings records and value assets. |
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Literacy.Financial
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