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Chapter 12 Vocab
Stack #4460168
| Question | Answer |
|---|---|
| Investing | The process of setting money aside to increase wealth over time for long term financial goals such as retirement |
| Return of investment | The measurement of gain or loss generated on an investment relative to the amount of money invested |
| Risk return ratio | Relationship of expected return profit you expect to make compared to the amount of risk taken with a given investment |
| Liquid asset | An asset that can be easily bought or sold |
| Stock market | A financial market that trades shares of ownership of public companies |
| Stock | A security that represents part ownership or equity in a company |
| Stock market index | A measurement of a section of the stock market typically a weighted average of the prices of selected stocks |
| Bull market | When prices in the financial market are on the rise or expected to increase |
| Bear market | When prices in a financial market experience a prolonged decline |
| Fixed annuity | Annuity that offers low guaranteed rates of interest and fixed income payments in retirement |
| variable annuity | A type of annuity that can vary in value based on the performance of the mutual funds inside it |
| Portfolio | A list of your investments |
| Prospectus | A description of the investing strategy the mutual fund management company will use to invest your money |
| Individual retirement arrangement | A tax advantage investing account that people use to save for retirement |
| Qualified retirement savings plan | An employer sponsored retirement plan that has a special tax treatment |
| 401K | A qualified retirement savings plan offered by a company to its employees who contributed money from their gross pay |
| Diversification | The practice of dividing the money a person invests among different types of investments in order to lower risk |
| Capitalization | The total dollar market value of a company or how much a company is worth |
| Retirement planning | The process of figuring out how much money you'll need in retirement and creating a plan to get there |
| Dividend | A distribution from the net profits of the company to its shareholders |
| Estate planning | Preparation of tasks to manage an individual's assets after death |
| Will | A legal document listing how a person wants their assets distributed after their death |
| Charitable organization | The organization set up to provide help and raise money for those in need |