Money Matters Chapter 6 - Investing

is quick and unexpected changes in value or price

Volatility

When a corporation issues only one type of stock, its called a

blue-chip stock

Spreading risk by putting money in different types of investments allows an investor to

diversification

Strategy of investing a fixed dollar amount at regular intervals

dollar-cost averaging

reduces the value of money and the return on investments

inflation

A legal document that gives detailed description of a security is a(n)

prospectus

Instructing your broker to buy/sell a stock when it reaches a specific price requires a(n)

stop order

Amount of money earned on an investment, usually expressed as an annual percentage

yield

Extended period of rising stock prices

Bull Market

Which investment strategy involves buying securities and holding them for long-term gains

Buy and Hold

Selling an investment for less than the price you paid results in a(n)

Capital loss

The portion of a company's earnings paid to stockholders is a(n)

Dividend

Allows investors to reinvest cash dividends by purchasing additional shares of stock

Dividend Reinvestment Plan (DRIP)

Stockbrokers are licensed by which organization?

Financial Industry Regulatory Authority (FINRA)

A company's first sale of stock to the public is its

Initial Public Offering

Neither a(n) nor a(n) are insured by the FDIC, but both are backed by the US government

Series EE Bond, Series 1 Bond

Share in the ownership of a corporation

Stock

What is net asset value (NAV)?

Assets - its liabilities dividend by # of shares the fund has

Certificate of debt issued by a corporation or government

Bond

Members of an research stocks for consideration and vote on securities to buy or sell

Investment Club

Collection of the investments a person has made

Investment Portfolio

a ____ instructs your broker to buy or sell a stock at the best price available

Market Order

____ is the price at which an investment can be brought or sold at the given point in time

Market Value

Fund that deal only in interest-paying, short-term investments such as certificates of deposit

Money Market Mutual Fund

Virtual markets where stockbrokers conduct business thorough an electric network

OTC market

known as the new-issues market, the ___ exists when a company 1st sells stock to the public

Primary Market

Stockholders written authorization to have someone cast a vote on his or her behalf

Proxy

shares in a(n) is a way to invest in real estate w/out commitment of owning property

Real Estate Investment Trust

is a measure of the likelihood that something will be lost

Risk

Amount of uncertainty a person is willing to handle

Risk Tolerance

Financial assets issues by corporations, governments, and other organizations

Securities

Short-term debt with maturity ranging from a few days to 52 weeks

Treasury Bill

Government bond - long-term investment w/a maturity of 30 years and sold in increments of $100

Treasury Bond

Fluctuations between periods of economic growth and slowdown are referred to as

The business cycle