FDM - Investing Test
dividend reinvestment plan (DRIP)
allows investors to reinvest cash dividends by purchasing additional shares of stock
yield
amount earned on an investment for a given period of time
rate of return
amount of money earned on an investment, usually expressed as an annual percentage
risk tolerance
amount of uncertainty a person is willing to handle
Appreciation
an increase in the value of an investment
bond
certificate of debt issued by a corporation or government
investment portfolio
collection of the investments a person has made
bull market
extended period of rising stock prices
securities
financial assets issued by corporations, governments, and other organizations
business cycle
fluctuations between periods of economic growth and slowdown
money market mutual fund
fund that deals only in interest-paying, short-term investments, such as certificates of deposit and commercial paper
capital gain
income that results from selling an asset for more than the purchase price
benefits of investing
increasing wealth, beating inflation, taking advantage of tax benefits
buy and hold strategy
investment strategy that involves buying securities and holding them for long-term gains as opposed to frequent trading
investment club
members research stocks for consideration, attend regular meetings, pay dues, elect officers, and vote on securities to buy or sell
Financial Industry Regulatory Authority (FINRA)
organization that stockbrokers are licensed by
personal investment plan
planning to set aside $100 per month to invest is an example
capital loss
selling an investment for less than the price you paid
stock
share in the ownership of a corporation
treasury bill
short-term debt with maturity ranging from a few days to 52 weeks
proxy
stockholder's written authorization to have someone cast a vote on his or her behalf
dollar-cost averaging
strategy of investing a fixed dollar amount at regular intervals
dividend
the portion of a company's earnings paid to stockholders
net asset value
the total of a mutual fund's assets minus its liabilities and dividend by the number of the shares the fund has outstanding
Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC)
two government bodies that regulate the financial markets
treasury bond
type of government bond that is a long-term investment with a maturity of 30 years and is sold in increments of $100
mutual fund
type of investment that is created by pooling the money of many people and investing it in a collection of securities
OTC market
virtual markets where stockbrokers conduct business through an electronic network of computers and telephones
common stock
when a corporation issues only one type of stock
