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Ch 2 Voc Test

Economics Chapter 2 Vocabulary Terms

Aggressive Growth Stock Mutual Fund mutual fund that seeks to provide max long-term capital growth from stocks of primarily smaller companies or narrow market segments; small cap fund
annuities a type of investment where the money is guaranteed by an insurance company; a savings plan through an insurance company
bond a debt instrument where a company owes you money the rate of return on these is low
CD Certificate of Deposit usually at a bank; this is just a savings account with a little higher interest rate because you are agreeing to tie up your money for a little while
commodity food, metal, or another fixed physical substance that investors buy or sell, usually via futures contracts
diversification to spread around, thus lowering one’s risk. Spreading your money among different classes of financial assets and among the securities of many issuers
dividend stock profits that are paid out to shareholders
fixed annuity a type of annuity that guarantees a certain rate of return – for example 6%; these are usually low and are not recommended for long-term wealth building
futures term used to designate all contracts covering the sale of financial instruments or physical commodities for future delivery on a commodity exchange
investments where one would put their money for long-term growth (suggested min. of 5 years)
Growth Stock Mutual Fund funds that buy stocks in companies that are medium in size; they have grown, but are still expanding; also called Mid-cap funds
large-cap fund type of funds that contain large, well established companies
liquidity the availability of money; as there is more liquidity, there is typically less return. The quality of as asset that permits it to be converted quickly to cash without loss of value
mid-cap fund a mutual fund containing a group of medium-sized companies that are growing
money market utilized for borrowing and lending money for three years or less. A mutual fund that seeks to maintain a stable share price and to earn current income by investing in interest-bearing instruments with short-term (usually 90 days or less) maturities
mutual fund pools of money that are managed by an investment company; they offer investors a variety of goals, depending on the fund and its investment charter
portfolio a list of your investments
rental real estate buying real estate to rent out as an investment; make sure you have plenty of cash before doing this
risk degree of uncertainty of return on an asset; in business, the likelihood of loss of reduced profit
risk return ratio relationship of substantial reward corresponding to the amount of risk taken
savings account accounts at financial institutions that allow regular deposits and withdrawals; the minimum required deposit fees charged, and interest rate paid varies among providers
share a piece of ownership in a company stock or mutual fund
single stock buying ownership in one company – the problem with single stocks is you are not diversified; there is a high degree of risk in single stocks
small-cap fund a mutual fund that invests in companies whose market value is less than about $1 billion
speculative purchasing risky investments that present the possibility of large profits, but also pose a higher-than-average possibility of loss
track record the past history of something; with investments, check at least the 5 or 10 year track record
variable annuity an annuity that has a varying rate of return based on the mutual funds you have invested in; this is better than the fixed annuity
Created by: NickPriceEllis



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