Chapter 6 and 7 Econ
Social Security Benefit
The amount of this a person receives is based on how much a person earned while working and how long he or she contributed
Initial Public Offering (IPO)
a company's first sale of stock to the public
Codicil
a document that explains, changes, or deletes provisions in a will
Prospectus
a legal document that gives a detailed description of a security
Power of the Attorney
a legal document that gives a person the power to act for another person regarding financial and legal matters
Will
a legal document that states a person's wishes for his/her estate after death
Beneficiary of a will
a person or group who receives the deceased person's assets
Living will
a statement of instructions for specific medical treatment if a person becomes unable to make medical decisions related to deathbed concerns
Real Estate Investment Trust
by purchasing, it is a way to invest in real estate without the complications and financial commitment of owning property
Investment portfolio
collection of the investments a person has made
Annuity
contract with an insurance company that provides regular income for a set period of time, usually life
Estate
everything you own or have a financial interest in when you die
Personal investment plan
example= planning to set aside $100 a month to invest
Primary market or New-issues market
exists when a company first sells stock to the public
Commodity Futures Trading Commission (CFTC)
financial market regulated by U.S. government (1 of 2)
Securities and Exchange Commission (SEC)
financial market regulated by U.S. government (2 of 2)
The business cycle
fluctuations between periods of economic growth and slowdown
Defined-benefit plan
in some of these payments will continue to a spouse of beneficiary after the death of the retiree
Examples of benefits of investing
increasing wealth, beating inflation, taking advantage of tax benefits NOT=assuming financial risk
Roth IRA
individual retirement arrangement in which individuals contribute after-tax income, but qualified withdrawals are not taxed
Stop order
instructing your broker to buy or sell a stock when and if it reaches a specific price
Market Order
instructs your broker to buy or sell a stock at the best price
Buy and Hold
investment strategy that involves buying securities and holding them for long-term gains as opposed to frequent trading
Probate
legal process of settling the affairs of an estate
Risk
measure of the likelihood that something will be lost
Investment club
members who research stocks for consideration, attend regular meetings, pay dues, elect officers, and vote on securities to buy or sell
Series EE bond and Series 1 bond
neither are insured by FDIC, but both are backed by US government
Trustee
person or institution named to manage assets on behalf of the beneficiaries
Individual Retirement Account (IRA)
personal account for setting money aside for retirement
Dividend
portion of a company's earnings paid to stockholders
Market Value
price at which an investment can be bought or sold at a given point in time
Rollover
process of moving retirement savings from one qualified account to another without incurring penalties and taxes
Investing
purchasing a financial product or valuable item with the goal of increasing wealth over time in spite of possible loss
Inflation
reduces the value of money and the return on investments
tax deferred
refers to when a person does not have to pay taxes on the money in a 401(k) account until it is withdrawn
Defined-contribution plan
retirement plan in which an employee and / or employer contributes to the employee's individual account under the defined plan
Capital loss
selling an investment for less than the price you paid
Living trust
set up during an individual's lifetime and provides for the management of assets before death and for the distribution of assets as directed after death
Diversify
spreading risk by putting in different types of investments
Minimum distributions
the minimum amount that must be withdrawn from a retirement plan each year
Vesting
the process of determining when money that has been set aside in a plan belongs to an employee
Annual percentage
the usual form that an investment's yield is expressed
Treasury Bond
type of governmental bond that is a long-term investment with a maturity of 30 years and sold in increments of $100
Common stock
when a corporation has only one class of stock
Bond
Certificate of debt issued by a corporation or government.
401(k) plan
Employer-sponsored retirement plan that allows an individual to deposit part of his or her earnings into a tax-deferred investment.
Bull Market
Extended period of rising stock prices
Securities
Financial assets issued by corporations, governments, and other organizations.
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.
Traditional IRA
Individual retirement agreement in which contributions are tax-deductible but withdrawals are taxed
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.
Trust
Arrangement through which a person transfers assets to a person, who then oversees and manages the assets on behalf of beneficiaries
Dividend reinvestment plan (DRIP)
Allows investors to reinvest cash dividends by purchasing additional shares of stock.
Rate of Return
Amount earned on an investment for a given period of time
Yield
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
Financial Industry Regulatory Authority (FINRA)
Organization by which stockbrokers are licensed
Retirement
Period of life after ending a working or professional career
Volatility
Quick and unexpected changes in value or price.
403(b) plan
Retirement plan available to employees of nonprofit organizations.
Solo 401(k) plan
Self-employed retirement plan that allows tax-deductible contributions for an employer and his or her employees.
Net Asset Value (NAV)
The total of a mutual fund's assets minus its liabilities and divided by the number of the shares the fund has outstanding
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 a electronic network of computers and telephones