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Investing

QuestionAnswer
Default Risk The risk that the company or government is unable to pay back the investor.
Bond A bond is an investment in which an investor lends money to a corporation or government with the expectation that it will be paid back with interest.
Dividend Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis
Coupon Rate/Interest Rate of Bonds When market interest rates rise, newly issued bonds offer higher yields, making existing bonds with lower fixed interest rates less attractive.
Individual Retirement Account (IRA) An IRA is a tax-advantaged investing tool set up by individuals for retirement savings
Investing The process of setting money aside to increase wealth over time for long-term financial goals such as retirement
Stock A share of the value of a company, which can be bought, sold, or traded as an investment and which gives the investor small partial ownership of the company
Traditional 401(k) Plan A 401(k) is an employer-sponsored retirement savings plan that allows employees to contribute a portion of their salary to an investment account, with the potential for employer matching contributions and tax advantages.
Market cap Market Cap refers to the total value of all a company's shares of stock.
Stock Split Stock splits make a stock more accessible to a greater number of investors. Company is in good health. This does not change the overall value of the company.
Bond Fund Investors buy shares in a bond fund, which pays out dividends. This is a good way to diversify your portfolio.
Why diversify your investing portfolio? To reduce or minimize risk.
Roth IRA Pay taxes now on your contributions.
Traditional IRA Pay taxes later when you retire.
Brokerage Account It’s a type of account used to buy and sell stocks, bonds, and funds
Inflation The rate at which the general prices of goods and services increase over time, leading to a decrease in the purchasing power of money.
Trading Meant for quick, short-term profits and gains
Juan buys a bond with a fixed coupon rate of 3%. Six months later, similar bonds that are issued have a coupon rate of 4%. Which of the following is TRUE if he chooses to sell the bond before maturity? The price of Juan’s bond will decrease
By the end of a bond's maturity, the investor will have received… The face value of the bond issued and interest payments
Main types of bonds? Government and Corporate
Which type of bond is riskier (Corporate or Government)? Corporate
Generally, the longer the duration of the bond, the (lower/higher) the chance the bond price may change due to changes in yield. HIGHER
Why is it challenging to match your investing decisions with how the stock market is performing? It is hard to predict trends, and trends can only be identified once they’ve already happened
How to make money with stocks? Receive dividends and/or they sell the stock at a higher price than what they bought it for
Created by: LindsayMiller344
 

 



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