Investing Vocab Review

Callable

A bond is ___ when it can be paid off before its maturity date.

Premium bond

A bond issued for more than its face value is known as a

Earnings per share

A corporation's after-tax earnings divided by the number of common stock shares outstanding is ___.

False

A coupon bond is recorded in the owner's name.

True

A debenture bond is backed by the reputation of a corporation

True

A default occurs when a company is unable to meet its financial obligations.

Call provision

A feature that allows a bond issuer to buy outstanding bonds from current bondholders before the maturity date is known as a(n) ______.

Securities exchange

A marketplace where brokers buy and sell securities is called a(n) _________.

Corporation

A public __issues stock that may be traded openly on the stock markets or over-the-counter.

Revenue

A(n) ____ bond is repaid from the income generated by a project it is designed to finance.

Debenture

A(n) ____ is a bond backed only by the reputation of the issuing corporation

Zero-coupon

A(n) _____ bond is a type of bond that is sold below its face value, with no interest payments, and redeemable for its face value at maturity.

General obligation

A(n) _____ bond is backed by the full faith and credit of the issuing governmental unit.

Registered

A(n) _____ bond is recorded in the owner's name by the issuing company.

Covertible

A(n) ______ bond can be exchanged for a specified number of shares of common stock.

Registered

A(n)__ bond is recorded in the owner's name by the issuer.

Coupon

A(n)__ or bearer bond is not registered in the owner's name by the issuer.

Stock split

A(n)____ is an increase in the number of outstanding shares of a stock.

Bear

A(n)____ market is characterized by the selling of stocks and pessimism.

Defensive

A(n)____ stock is one that remains stable during an economic decline.

Investment

A(n)_____ is the use of money to earn the best possible return with the least amount of risk.

Bull

A(n)_____ market is characterized by rising stock prices and optimism.

Stock index

A(n)______ is a benchmark that stock investors use to judge investment performance.

Tax-deferred

An investment is ___ when income is taxed at a later time.

Tax-exempt

An investment is ___ when there is no tax due, either now or in the future

Fluctuate

Bond prices tend to ______ as much as-if not more than- stock prices.

Fixed Income

Bonds are considered ___ investments because specified amount of interest is paid on a regular basis.

False

Bonds are sold for more than their face value are sold at a discount.

Municipal

Bonds issued by state and local governments are called _____ bonds.

True

Bonds must be repaid in full at maturity.

False

Bonds pay a variable interest rate monthly.

Leverage (buying on margin)

Borrowing money to buy stock is called ________.

False

Brokers in the over-the-counter market deal face-to-face.

False

Buying on margin is an illegal activity.

True

Capital gains result from the sale of assets such as stocks, bonds, or real estate.

Board of Directors

Common stockholders vote for members of the ______.

Junk

Corporate bonds with a low or no investment rating, called ______ bonds, are risky and speculative.

False

Dollar-cost averaging is a short-term investment strategy.

Investment-grade

High-quality bonds are ______ because they are considered safe, stable, and dependable.

Tax avoidance

Legally reducing taxes by careful planning is called

1,000

Most bonds require a minimum investment of

False

Municipal bonds are issued by public corporations

Morgage bonds

Secured bonds, called ______, are backed by specific assets of the issuing firm.

True

Short selling involves selling borrowed stock.

Auction

Stock exchanged are ______ markets where buyers and sellers come together to buy and sell securities.

False

Stock is purchased on a stock exchange at its par value

Floor brokers

Stocks are bought and sold by _____.

Growth

Stocks in companies that reinvest profits, rather than pay dividends, are called _______ stocks.

Blue chip

Stocks of large, well-established companies are called ____ stocks.

Income

Stocks that pay high dividends over time are called _____ stocks.

False

Tax avoidance occurs when illegal actions are taken to reduce tax liability

True

The Wall Street Journal contains full bond market price information.

Par value

The _______ is an assigned dollar value that is printed on a stock certificate.

Current yield

The _______ is determined by dividing the annual interest dollar amount of a bond by its current market price.

Face Value

The amount a bondholder is repaid when a bond matures is called ______.

Stock split

The letter "s" next to a stock in the stock listings would mean

True

The par value assigned to a stock has nothing to do with the stock's market value.

Maturity

The principal of a bond must be repaid in full on its ____ date.

The maturity date

The principal or face value of the bond must be paid in full at

True

The securities market is where you buy and sell stocks and bonds.

Tax shifting

To postpone taxes until the following year is called

False

Very few people (individuals) own stock in the United States.

Debentures

What are corporate bonds backed by the general credit standing of a corporation called?

Direct investment

What is the long-term technique where investors buy stock directly from a corporation?

Yield

What represents the cost of dividends as a percentage of the current price?

Stock split

What strategy lowers the selling price of a stock and encourages more stock purchasing?

Dividends

When a company is profitable, the stockholders often receive a distribution of money called ____.

Discount

When bonds sell for less than their face value, they are selling at a ______.

Premium

When bonds sell for more than their face value, they are selling at a ________.

Market

When you buy stock, you pay ___ value.

The New York Stock Exchange

Which of the following is the largest organized exchange in the United States?

Junk bonds

Which of these bonds would have a low rating?

Buy and hold

Which of these strategies is a long-term technique?

Buying on margin

Which of these strategies is a short-term technique?

True

With preferred stock, dividends are fixed, regardless of how the company is doing.

True

You can assign your stock voting rights to someone else by completing a proxy.

Cyclical

_____ stocks do well in a good economy but poorly in a bad one.

Municipal

______ bonds are issued by state or local governments.

Dividend reinvestment

_______ means using dividends previously earned on stock to buy more shares.