Personal Finance - Chapter 14

A ________ is a promissory note, or a promise to repay a certain amount of money at a future date.

A bond is a promissory note, or a promise to repay a certain amount of money at a future date.

A bond's interest rate, or ___________, represents the interest due on the bond. The regular interest payments are also called ___________.

A bond's interest rate, or coupon rate, represents the interest due on the bond. The regular interest payments are also called coupon payments.

A __________ firm executes investment trades for investors.

A brokerage firm executes investment trades for investors.

A large pension fund is an example of an _________________

A large pension fund is an example of an institutional investor.

A stock and/or bond issued by governments and businesses is commonly referred to as a ____________

A stock and/or bond issued by governments and businesses is commonly referred to as a security.

A stock is _________ when the company is trading on a stock exchange such as the NYSE or NASDAQ.

A stock is publicly traded when the company is trading on a stock exchange such as the NYSE or NASDAQ.

Companies sometimes pay cash distributions known as ____________ to the companies' owners who are known as __________

Companies sometimes pay cash distributions known as dividends to the companies' owners who are known as shareholders.

_____________ are issued by large firms and have all degrees of risk. Those with the highest risk are called ___________

Corporate bonds are issued by large firms and have all degrees of risk. Those with the highest risk are called junk bonds.

Emilio's ______________ portfolio has stocks, bonds, mutual funds and real estate.

Emilio's investment portfolio has stocks, bonds, mutual funds and real estate.

FHA or Ginnie Mae may issue bonds known as ______________

FHA or Ginnie Mae may issue bonds known as federal agency bonds.

Krisztina has purchased __________ in a company, which represents a piece of ownership.

Kristina has purchased stocks in a company, which represents a piece of ownership.

Merrill Lynch is an example of a ______________ firm because its brokers advise and execute trades.

Merrill Lynch is an example of a full service brokerage firm because its brokers advise and execute trades.

__________ will typically own a wide range of investments. Multiple investments in a variety of different types of investments are called ___________

Mutual funds will typically own a wide range of investments. Multiple investments in a variety of different types of investments are called diversification.

Myles likes to evaluate companies and pick his own stocks. He is considered an ___________

Myles likes to evaluate companies and pick his own stocks. He is considered an individual investor.

The ________ is an example of a secondary market that uses an auction system to trade stocks.

The New York Stock Exchange (NYSE) is an example of a secondary market that uses an auction system to trade stocks.

The debt of the United States government is financed with ___________

The debt of the United States government is financed with treasury bonds.

The expiration date of a bond is called the ______________

The expiration date of a bond is called the maturity date.

The government agency that regulates and monitors the stock market is called the _______________

The government agency that regulates and monitors the stock market is called the Securities and Exchanged Commission (SEC).

The maturity value of a bond is shown on the front of the bond, known as ____________

The maturity value of a bond is shown on the front of the bond, known as face value.

The ______________ is where the initial public offering occurs.

The primary market is where the initial public offering occurs.

The secondary market includes the ______________

The secondary market includes the National Association of Securities Dealers Automatic Quotation (NASDAQ) System.

To finance large public projects such as water or sewer systems, state or local government may issue _________

To finance large public projects such as water or sewer systems, state or local government may issue municipal bonds.

When a company "goes public," this first sale of stock is called a(n) _____________

When a company "goes public," this first sale of stock is called a(n) initial public offering.

When stock sales are reported in the newspaper or in the financial news, these transactions occurred in the ______________

When stock sales are reported in the newspaper or in the financial news, these transactions occurred in the secondary market.

When you trade on E*TRADE or similar companies, you are working with a ___________, who offers lower ___________ but a reduced level of service.

When you trade on E*TRADE or similar companies, you are working with a discount brokerage, who offers lower commission but a reduced level of service.

Financial planning pyramid

highest risk - highest earnings commodities | penny stock collectibles | speculative stocks /bonds/ mutual funds blue-chip common stock | real estate | growth mutual funds balanced mutual funds | high-grade preferred stock | high-grade convertible bonds money market accounts or mutual funds | high-grade municipal bonds or mutual funds | high-grade corporate bonds or mutual funds insured savings / checking accounts | U.S. savings bonds | certificates of deposit | treasury issues lowest risk - lowest earnings