Personal Finance Chapter 13

corporate bond

A corporation's written pledge to repay a specified amount of money, along with interest.

dividend

A distribution of money stock, or other property that a corporation pays to stockholders.

speculative investment

A high risk investment made in the hope of earning a relatively large profit in a short time.

emergency fund

An amount of money you can obtain quickly in case of immediately need.

equity capital

Money that a business obtains from its owners

mutual fund

Pools the money from many investors--its shareholders--to invest in a variety of securities.

liquidity

The ability to buy or sell an investment quickly without substantially affecting the investment's value.

maturity date

The date on which a corporation, government, or municipality will repay the borrowed money.

business cycle

The increase and decrease in a nation's economic activity.

Asset allocation

The process of spreading your assets among several different types of investments (sometimes referred to as asset classes) to lessen risk.

economics

The study of how wealth is created and distributed.

rate of return

The total income you receive on an investment over a specific period of time divided by the original amount invested.

government bond

The written pledge of a government or a municipality to repay a specified sum of money, along with interest.

-Stocks issued by large corporation (large cap) -Stocks issued by medium-size corporations (midcap) -Stocks issued by small, rapidly growing companies (small cap) -foreign stocks -bonds -cash

What are the typical asset classes?

line of credit

a short-term that is approved before you actually need the money. Because the paperwork has already been completed and the the loan has been pre-approved, you can later obtain the money as soon as you need it.