| A | B |
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| Securities | Refers to bonds, stocks, and other documents that are sold by corporations and governments to raise large sums of money. |
| Securities | Two types: debt and equity |
| Debt Securities | SOmetimes you are in need of money when funds are not available to you. |
| Equity Securities | People commonly invest money in companies in hopes of earning more money. |
| Equity Securities | Purchasing part ownership in the company. Part ownership is done through stocks. |
| Debt Securities | Bonds and other documents that represent borrowing. |
| Bonds | Are fancy IOU's. |
| Bonds | Compaies and governments issue these to fund their day-to-day opersations or to finance special projects. |
| Bonds | You are loaning your money for a certain period of time to the issuer. |
| Bonds | A certificate that is a promise to pay a definite amount of money at a stated interest rate on a certain date. |
| Bonds | Two types: Corporate and Government |
| Corporate Bonds | Issued by corporations |
| Corporate Bonds | You become a creditor of the organization. |
| Face Value | The maturity value: the amount being borrowed. |
| Corporate Bonds | Interest is paid periodically to the investor based on the amount and the stated interest rate. |
| Government Bonds | Two types: Municipal and U.S. Savings |
| Municipal Bonds | Bonsds issued by local or state government. |
| Municipal Bonds | Usually interest earned is exempt from federal and most state taxes. |
| Municipal Bonds | Considered to be safer than corporate bonds. |
| Municipal Bonds | Normally sold with bonds $1,000 and over. |
| Municipal Bonds | Interest is usually not as high as corporate bonds. |
| U.S. Savings Bonds | One of the safest investments and one desirable for investors with only small amounts to invest. |
| U.S. Savings Bonds | Come in denominations from $50 to $10,000 |
| U.S. Savings Bonds | Bond is bought at 1/2 its face value. |
| U.S. Savings Bonds | The interest earned is determined by the length of time the bond is held. |
| Stocks | You are becoming part owner of the company when you purchase this. |
| Stock Certificate | Ownership of stock is shown by a printed form. |
| Stocks | The risk of losing your money is higher with this than with bonds. |
| Market Value | The price at which a share of stock can be bought and sold in the market. |
| Two types of stock | Preferred and Common |
| Preferred Stock | Has priority over common stock in the payment of dividends. |
| Preferred Stock | Less risky than common stock. |
| Preferred Stock | Stockholders have no voting rights within the corporation. |
| Dividends | If a business is profitable, part of the profits may be paid to the stockholder in the form of this. |
| Common Stock | Represents general ownership in a corporation and a right to share in its profits. |
| Common Stock | Has no stated dividend rate. |
| Common Stock | Shareholders have one vote per share of stock. |
| Stockbroker | A licensed specialist in the buying and selling of stocks and bonds. |
| Commission | For their services, stockbrokers charge this. |
