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Personal Finance vb
Personal Finance Vocab Chapter 11-13
| Question | Answer |
|---|---|
| Asset allocation decision | The decision of which mix of broad classes of investments will meet needs for return and risk |
| Bond | A security representing debt of the issuer. |
| Commercial Bank | A financial institution that accepts deposits and makes loans. |
| Commission-based investment advisor | Advisor compensated by commissions from the investments sold to clients. |
| Credit union | A financial institution that is owned by its members. Members finance the credit union by making deposits, and the credit union extends loans to its members. |
| Depositary financial institution | Raises funds by accepting deposits from customers. |
| Equity | Funds that owner have invested in their business |
| Fee-based investment advisor | Advisor who charges a fee for services rendered. |
| Finance company | A financial institution that extends loans to its customers but raises funds from investors rather than accepting deposits |
| Financial intermediary | Any financial institution that collects funds from investors and supplies these funds to business and other entities (e.g., a government) that need funds. |
| Investment monitoring | Process of assessing investments to determine if they meet goals. |
| Marketable securities | Securities that trade on open financial markets. |
| Money market mutual fund | Mutual fund that invests in money market securities. |
| Mutual fund | Financial institution that raises funds by selling its stock to investors and investing those funds in securities such as stocks and bonds of other companies. |
| Pension fund | A fund holding and investing funds contributed by companies and/or their employees to provide an income for employees who retire. |
| Precautionary motive | The need to hold cash as a cushion for emergency use. |
| Real estate investment trust | A company that invests in income-producing real estate property. |
| Retirement funds | Funds-holding investments to provide retirement income. |
| Return on investment | Profit per period for each dollar invested. |
| Securities brokerage firms | Securities firms that act as an agent to transact securities from one investor to another. |
| Stock | A security that represents ownership in a corporation. |
| American Depositary Receipt (ADR) | Receipt for stock of a company in a foreign country. |
| Ask price | Price for which active sellers offer to sell a stock. |
| Bid price | Price for which buyers are actively offering to buy a stock. |
| Bond rating | Ranking that measures a bond's default risk. |
| Bull market | Period when market prices rise. |
| Cash dividend | Corporation's cash payment to shareholders. |
| Convertible bond | Bond that is exchangeable into stock. |
| Corporate bonds | Corporations' debt issues with maturities greater than 1 year |
| Coupon rate | The rate of interest that the bond pays each year based on the face value |
| Current yield | Bond annual interest divided by its market price. |
| Default | Condition occurring when a company fails to pay interest on its debt. |
| Financial markets | Markets that provide the means for buying and selling securities. |
| Form 10-K | Corporation's annual financial statements filed with the SEC. |
| Goodwill | Value of a business over and above its book value. |
| Initial margin requirement | Percentage of funds needed to buy a security with borrowed money. |
| Limit order | Order to buy or sell at a specified price (or better). |
| Maintenance margin requirement | Margin percentage that an investor must maintain in an investment position. |
| Margin | Funds that brokerage firms lend to clients using securities as collateral. |
| Margin call | Call to deposit additional funds in a margin account. |
| Market index | Representative portfolio of securities that measures market performance |
| Maturity | The date when the bond face value must be paid. |
| Municipal bond | Bond issued by states, cities, etc., interest is exempt from U.S. income tax. |
| Note | Bond with maturity of about 3-10 years. |
| Odd lot | Less than 100 shares of stock. |
| Par value | Principal amount of a bond that is paid to the bondholder at maturity |
| P/E ratio | Stock price divided by earnings per share. |
| Return on equity | Measure of company profitability equal to profits divided by equity |
| Stock symbol | One to five letters that uniquely identify a company's stock. |
| Stock exchange | Organization that provides a framework and mechanisms for trading securities. |
| Stockholders' equity | The net value of a corporation: assets less liabilities. |
| Treasury bonds | Fixed-interest bonds issued by the U.S. Treasury with original maturity of 30 years. |
| Treasury note | Bonds issued by the U.S. Treasury with fixed interest and original maturity of 2-10 years. |
| Yield to maturity | The total return over life of a bond. |
| 12b-1 fee | Fee paid by some mutual funds to cover fund selling expenses. |
| Beta | Measure of risk relative to the market. |
| Business risk | Variation in a firm's value due to the firm's product. |
| Closed-end fund | Investment company with a fixed number of shares outstanding. |
| Diversification | Combining a number of investments into a portfolio. |
| Growth investing strategy | Buying stocks with potential for high growth. |
| Interest rate risk | Variation in return caused by changes in interest rates. |
| Large-cap fund | Fund that invests in larger companies. |
| Liquidity risk | Risk of being unable to immediately sell an investment at its market value. |
| Load fund | Fund that charges a load to purchase (or possibly redeem) shares. |
| Management fee | Fee paid by a mutual fund to its investment advisor to manage the fund's portfolio. |
| Management risk | Variation in a firm's return attributable to the company's management. |
| Market risk | Variation in returns that is related to market returns. |
| Mid-cap fund | Fund that invests in firms in the middle range of size. |
| Net asset value | Total net assets of a fund divided by the number of shares outstanding. |
| No-load fund | Fund that does not charge a load to buy or redeem shares. |
| Open-end fund | Fund that sells and redeems shares directly to investors at net asset value. |
| Portfolio | Set of investments that are managed as a group. |
| Standard deviation | Measure of variation in stock returns that measures risk. |
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