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