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Chap 2 vocab.
| Term | Definition |
|---|---|
| Aggressive Growth Stock Mutual Fund | a mutual fund that seeks to provide maximum long-term capital growth from stocks of primarily smaller companies or narrow market segments. Dividend income in incidental. This is the most volatile fund; invested in smaller co |
| *annuity | 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. A form of I.O.U. issued by corporations, government, or government agencies. The issuer makes regular interest payments on the bond and promises to pay back or r |
| *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 (6 months, one year, etc.) |
| 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 | a 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 for a minimum 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 “cap” means capitalization |
| 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. “cap” means capitalization |
| 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. Some funds, for example, seek to generate income on a regular basis. Others seek to preserve an investor’s |
| 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 |
| Small-cap fund | a mutual fund that invests in companies whose market value is less than about $1 billion. Mutual funds that buy and sell smaller more volatile companies; also known as an Aggressive Growth Stock Mutual Fund. “cap” means capitalization |
| 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:
OcelotKnight
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