Personal Finance: Chapter 8

corporate bond

a corporation's written pledge to repay a specific amount of money, along with interest

prospectus

a document that discloses information about a company's earnings, assets and liabilities, its products or services, a particular stock, and the qualifications of its management

speculative investment

a high-risk investment that might earn a large profit in a short time

emergency fund

a savings account you can access quickly to pay for unexpected expenses or emergencies

financial planner

a specialist who is trained to offer specific financial help and advice

preferred stock

a type of stock that gives the owner the advantage of receiving cash dividends before common stockholders receive cash dividends

common stock

a unit of ownership of a company that entitles the owner, or stockholder, to voting privileges

mutual fund

an investment in which investors pool their money to buy stocks, bonds, and other securities selected by professional managers who work for an investment company

dividends

distributions of money, stock, or other property that a corporation pays to stockholders

tax-exempt income

income that is not taxed

tax-deferred income

income that is taxed at a later date

equity capital

money that a business gets from its owners in order to operate

capital gain

profit from the sale of assets such as stocks, bonds, or real estate

retained earnings

profits that a company reinvests investment

liquidity

the ability to buy or sell an investment quickly without substantially reducing its value

diversification

the process of spreading your assets among several different types of investments to reduce risk

capital loss

the sale of an investment for less than its purchase price

government bond

the written pledge of the government or a municipality, such as a city, to repay a specific sum of money with interest