Unit 3: Investing
Mutual Fund
A collection of stocks and/or bonds combined into one fund which will be traded as a unit, typically chosen and actively managed by an "expert" in exchange for a fee from each investor
Security
A financial asset, such as a stock or a bond, that can be bought and sold in a financial market
Index Fund
A low-fee portfolio of stocks chosen to track or mimic a stock market index, thereby removing the human element of investing because no one is choosing the individual stocks
Bond
A security in which the investor loans money to a company or government, which then pays regular interest to the bondholder and returns the principal on the bond's maturity date
Small cap stock
A stock with market capitalization of less than $1 billion
Mid Cap Stock
A stock with market capitalization over $1 billion and less than $10 billion
Large Cap Stock
A stock with market capitalization over $10 billion
S&P 500
An index of 500 large cap companies chosen based on their size, industry, and other factors, used to represent the entire market
Market Capitalization
Market value of a company's outstanding shares calculated by multiplying the current share price by number of shares outstanding
Dividend
Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis
Initial Public Offering (IPO)
The first time a company becomes publicly traded by issuing stock that may be bought and sold on the market
Diversification
The practice of investing in a large variety of stocks, bonds, and/or funds as a way to as a way to reduce your overall risk
Rate Of Return
The ratio of money gained or lost on an investment relative to the amount of money invested; also known as return on investment (ROI).
Nasdaq
The second largest stock exchange in the world behind the NYSE ; Represents TECHNOLOGY stocks
New York Stock Exchange (NYSE)
The world's largest stock exchange, physically located in New York City, with its 2800 traded companies valued at over $21 trillion (in 2017)
