Selecting Investments Vocab
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| Diversification | An investment strategy in which you spread your investment dollars among industry sectors. Reducing risk by combinding different investments whose prices aren't likely to move in step with another.
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| Industry | A group of companies that make the same products, I.E. pharmaceutical companies.
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| Portfolio | A collection of investments owned by a individual or organization.
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| Bonds | An IOU that a company or government selles when it borrows money. Bonds are called fixed-income investments because they pay you a fixed amount of interest to the bondholder who purchased this IOU.
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| High-Yield Bonds | To attract investors, the issuers of theses bonds pay a higher rate of interest that investment grade bonds with the maturity. They are rated below investment grade bonds and are also called "Junk Bonds".
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| Issuer | An entity which issues and is obligated to pay principal ad interest in a debt security.
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| Interest Rate | Compensation paid or to be paid for the use on money. Interest is generally expressed as a percentage rate. (Also referred to as coupon rate)
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| IOU | Menas exzactly as it sounds "I Owe You". It is an acknowledgement of a debt.
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| Maturity | The date when the principal amount of a security is payable.
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| Principal | The face amount of a bond, payable at maturity. (Also referred to as face or par value).
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| Trade Date | The date when the purchase of a sale or bond is transacted.
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| Mutual Funds | An investment company that pools savers' money to invest in a variety of stocks and bonds. Professionals who research companies and buy or sell stocks activity manage them based on what they think is best for the shareholder.
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