Investing Unit

Corporate Bonds

A debt obligation issued by corporations to raise money without selling stock.

junk bonds

High-risk, high-interest bonds

IPO

Initial public offering, a corporation's first offer to sell shares to the public

Dow Jones Industrial Average

Measure of average of stock prices of major industries on NYSE

Diversification

Reduces risk by using a variety of investment

Roth IRA

Taxes paid up front

Treasury bond

a government bond that can be issued for as long as 30 years

Standard & Poor's 500

a stock index based on prices of 500 major US corporations in a variety of industries and market sectors

Securites and Exchange Commission

federal agency that regulates the financial markets and protects the investing public from fraud and malpractice

Liquidity

how easily an asset can be converted into cash

share of stock

individual unit of ownership available for purchase

dollar cost averaging

investing roughly equal amounts of money at regular intervals

stock exchange

organization that facilities buying and selling of securities

defined benefit plan

percentage of salary

NASDAQ

price weighted average of all stocks on NASDAQ

shareholder

someone who owns shares (stock) in a company

municipal bonds

tax-exempt bonds issued by state and local governments

Traditional IRA

taxes paid when you retire

coupon rate

the interest rate that a bond issuer will pay to a bondholder

mutual fund

an investment program funded by shareholders that trades in diversified holdings and is professionally managed.

defined contribution plan

contribute to portfolio