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5.03
Fundamentals of Investing
| Term | Definition |
|---|---|
| bond | lending to the govt. or companies |
| brokerage firm | facilitates buying and selling of investments from stock exchange |
| capital gain | unearned income from selling assets above their purchase prices |
| discount brokerage firm | only completes orders to buy and sell investments |
| dividend | share of profits distributed in cash |
| financial advisor | helps people make investing decisions |
| full-service brokerage firm | offer investment transactions, investment advice, and financial advisor |
| index | group of similar stocks and bonds |
| index funds | mutual fund to reduce fees by investing in the stocks and bonds that compose an index |
| inflation | rise in prices |
| inflation risk | danger that money won't be worth today's value in the future |
| investment | assets purchased with goal of acquiring additional money from the asset, but with risk of loss |
| investment philosophy | individual's approach to investment risk |
| investment risk | investment's potential to fail to pay expected return |
| market price | current price a buyer is willing to pay |
| maturity date | specific time when the principal amount of the bond is to be repaid to the bondholder |
| mutual fund | company combines many investors' funds than invests that amount into a diversified portfolio of investments |
| portfolio diversification | reduces risk by spreading money over a wide range of investments |
| rate of return | total return on an investment; % of amount of money saved |
| rent | fee charged for property usage |
| return | profit by saving or investing |
| risk | chance of loss from an uncontrollable event |
| speculative investments | potential for significant return amounts in short time periods |
| stock | share of ownership in a company |
| stock/share holder | owner of a stock |
| stock exchange | organized, central service to buy and sell stocks, bands, and other tradeable investments |
| tax-advantaged investments | reduce, defer, or adjust the current year tax liability |