Business chapter 8

What is 403(b)

A tax sheltered annuity (TSA) plan is a retirement plan for certain tax exempt organizations and certain ministers. Individual accounts in a 403(b) plan can be any of the following types.

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

Retained earnings

Profits that a company reinvests, usually for expansion or to conduct research and development

List four specific sources of financial information.

-Standard & Poor's Stock and Bond Guide -Value Line Investment Survey -Handbook of Common Stocks -Morningstar Mutual Funds -Wiesenberger Investment Companies

Describe sources of funds for investing

-setting aside funds before you buy other things - contributing to employer- sponsored retirement and saving programs -saving gifts of money and unexpected windfalls

Compare the main types of investment alternatives in terms of their risk and liquidity

-stocks -bonds - mutual friends -real estate

Corporate bond

A corporations 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

What is a 401 (k)?

A retirement savings plan sponsored by an employer. It lets workers save and invest a piece of their paycheck before takes are taken out. Texas aren't paid until the money is withdrawn from the account

Emergency fund

A savings account that you can easliy access wuickly to pay for unexpected expenses

Write an investment plan for yourself.

A savings or investment plan starts with a specific, measurable goal. You can reach that goal through: -A savings account -An investment -You might also decide that you should begin saving money in an emergency fund.

Financial planner

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

Mutual fund

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

Explain why it's important to have a goal before making investments?

Before investing, you should set financial goals that are compatible with your values

Describe a demographic group that may not prefer investment risk. Describe another demographic group that may be more comfortable with a greater degree of risk.

Beginning investors may be afraid of the risk associated with some investments. However, it helps to remember that without risk, it is impossible to obtain returns that make investments grow. It may be easier to take risks when you: -Are younger -Have more experience as an investor

Describe the role of the investor in the investment process.

Develop a plan Put it into action

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

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 rick

Capital gain

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

Capital loss

The sale of an investment for less than its purchase price

Government bond

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