8.5 Annuities, Methods of Saving, and Investments

mutual fund

A group of investments managed by a professional investor is called a _____________.

financial portfolio

A listing of all the investments that a person holds is called a ______________. To minimize risk, it should be diversified, containing a mixture of low-risk and high-risk investments.

annuity

A sequence of equal payments made at equal time periods is called a/an ___________.

value of the annuity

In the formula A = P(1 + r/n)^nt - 1 / (r/n), P is the deposit made at the end of each compounding period, r is the annual interest rate compounded n times per year, and A is the ___________ after t years.

bonds

People who buy ______________ are lending money to the company from which they buy them.

dividends

Shares of ownership in a company are called stock. If you sell shares for more money than what you paid for them, you have a capital gain on the sale. Some companies distribute all or part of their profits to shareholders as ___________.

false

True or False: A traditional IRA does not require paying taxes when withdrawing money from the account at age 59 1/2 or older.

false

True or False: People who buy bonds are purchasing shares of ownership in a company.

true

True or False: Stocks are generally considered higher-risk investments than bonds.

true

True or False: With the same interest rate, compounding period, and time period, a lump-sum deposit will generate more interest than an annuity.

roth

With a/an ____________ IRA, you pay taxes on the money you deposit, but you can withdraw your earnings tax-free beginning when you are 59 1/2 years old.