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