Business Final

Exchange traded fund

A collection of investments including stocks, bonds, and other investments that are traded like a stock

index fund

A collection of stocks and bonds that is managed based on market trends. It is more reliable to produce stead returns.

mutual fund

A collection of stocks and bonds that is managed by a person or funds manager. The point is to get a higher return and try to "beat the market"

target date fund

A fund that is offered by an investment company to mature over a specified period of time. It will change how your funds are distributed depending on how close you are to needing the funds

bond

A loan given to a business or government that returns regular interest payments and is repaid in a set amount of time

Describe the difference between a mutual fund and an index fund

A mutual fund is a collection of stock and bonds that is managed by a person to try to earn more money than an index fund.

Dividend

A portion of the profits that is returned to stockholders periodically

What is the difference between a bond and a stock?

A stock is partial ownership in a company a bond is a loan given to company that has a end date a pays regular interest payments.

Franchise

Begins with a good concept that is easy to duplicate. You can buy a franchise

How does buying a share in a company benefit the investor? how does it benefit the company?

Buying a share in the company allows you to own part of the company and make money by either selling your shares or regular dividends based on profit the company earns. Shares benefit the company by giving the company money.

Processing sector

Changes raw materials into more finished products, specializing in product specific skills, examples include paper mill, oil refineries, smelting plants, and food processing

What two factors that can influence an individuals company's stock price?

Companies reputation/rumors about the company, supply and demand, number of shares available to purchase, Reddit, etc.

Describe the difference between compound interest and simple interest

Compound interest you earn interest on the interest you have already earned. Simple interest you only ear interest on your initial investment

What does diversification mean and how does it apply to investments?

Diversification means you have many different types of investments in your portfolio. with having different stocks and bonds you are more likely to earn higher returns in the long run because if one stock does poorly, you have other stocks that hopefully have done better.

Production sector

Gathers raw products in their natural state-specializes in productions, example include agricultural, mining, fishing, forestry

coporation

Hardest way to start a business. Ownership is bought and traded on the stock market. Many owners, and very limited liability

Cooperative

Has a membership anyone can join and members share expenses and get leftover profit. Believes in helping the community. Believes in helping the community invests in education, training, and Independence

Compound interest

Interest that is calculated based on interest you earn

Simple interest

Interest that is earned only on the original invested amount

What are the benefits of investing in a Target Date Fund (TDF)

Investing in a target date fund allows you to plan for your retirement. it will adjust how risky your investments are the closer you get to retirement

Manufacturing sector

Makes finished products out of processed materials ready for market, specializes in creativity. Examples include bakery, auto/parts manufacturer, furniture

Sole Proprietorship

One owner of the business. Most businesses are sole proprietorship. One person is responsible for profits and losses for that business. Most liability

Stock

Partial ownership of a company. Bought and sold on the stock market

Describe two different ways you make money in the stock market

Selling your stocks-you can sell your stocks to other investors. Dividends-when the company makes a profit you earn dividends on the stocks you own

Intermediary sector

Specializes in data management. Stores and distributed goods. Examples include- trucking companies, big box stores

Service sector

Specializes in people skills. Provides service to consumers. Examples include hair stylist, car repair, music lessons

Non profit

Tax exempt organization that serves the public. Must be charitable, educational, scientific, religious, or literary

1040

Tax form everyone filled out in April to disclose your total income and the total amount you owe/paid in taxes in a given year

Explain why it is important to invest money early and why you get a larger return.

The earlier you invest money the more time that money has to grow and give you a higher return on your investment

W-4

The form you fill out when you get a job where you state your filing status and how many exemptions you are eligible for

How is investing in the stock market different from a savings account?

The stock market is for long term investments-like retirement. In the end they have higher returns than a savings account. Saving accounts are for short term investments

Diversification

To maintain an investment portfolio that has a variety of stocks and bonds, to help increase the chance of return.

Partnership

Two or more owners that bring unique perspectives to the business. Easy to start, an agreement is signed to divide ownership, you must share liability

I-9

Verifies your citizenship or eligibility to work in the United States

What risk are you taking by investing money in the stock market?

You are risking that the company will fail and you will lose your money

How can you make money from an index fund if some of the stocks in it actually losing money?

You can make money on an index fund because you have a diverse portfolio. Even if some companies lose money, overall you should have enough companies that make money, you will not lose money in the end.

1099

You will get this if you are a contractor that disclosed how much you earned in a given year. Like a w-2 for non-employees

W-2

Your employer mist give this to you by January 31st to tell you the total amount of money you made for the year and the total amount you paid in taxes

Shareholder

partial ownership of a company