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Fin Lit 2
Introduction To Investing Vocab List
Question | Answer |
---|---|
Bond | A form of lending to a company or the government (city, state, or federal). |
Dividend | The share of profits distributed in cash. |
Financial Risk Pyramid | Illustrates the trade-offs between risk and return for a number of saving and investing tools. |
Index | A group of similar stocks and bonds. |
index Fund | A mutual fund that was designed to reduce fees by investing in the stocks and bonds that make up an index. |
Inflation | The rise in the general level of prices. |
Inflation Risk | The danger that money won't be worth as much in the future as it is today. |
Investing | The purchase of assets with the goal of increasing future income. |
Investment Philosophy | An individual's general approach to investment risk. |
Investment Risk | The possibility that an investment will fail to pay the expected return or fail to pay a return at all. |
Market Price | The current price that a buyer is willing to pay for stock. |
Maturity Date | The specified time in the future when the principal (or initial investment) amount of the bond is repaid to the bondholder. |
Portfolio Diversification | Reduces risk by spreading investment money among a wide array of investment tools. |
Rate Of Return | The total return on an investment expressed as a percentage of the amount of money invested. |
Risk | The uncertainty regarding the outcome of a situation or event. |
Rule Of 72 | Allows a person to easily calculate when the future value of an investment will double the principal amount. |
Speculative Investments | Have the potential for significant fluctuations in return over a short period of time. |
Stock | A share of ownership in a company. |
Stockholder Or Shareholder | The owner of a stock. |
Tax-sheltered Investments | Eliminate, reduce, defer, of adjust the current year tax liability. |