| A | B |
|---|
| bear market | a prolonged period of falling stock prices and a general feeling of investor pessimism |
| bull market | a prolonged period of rising stock prices and a general feeling of investor optimism |
| capital gain | an increase in value of the stock above the price initially paid for it |
| dividends | part of the corporation's profits paid to stockholders |
| growth stocks | stocks in corporations that reinvest their profits into the business so that it can grow |
| income stocks | stocks that have a consistent hisotry of paying high dividends |
| stock split | an increase in the number of outstanding shares of a company's stock |
| stockholders | shareholders - owners of the corporation |
| DJIA | Dow Jones Industrial Average |
| capital loss | a decrease in the value of stock below the price initially paid for it |
| defensive stock | a stock that remains stable and pays dividends during an economic decline |
| growth stock | stocks in corporations that reinvest their profits into the business so it can grow |
| dollar cost averaging | a technique the involves the systematic purchase of an equal dollar amount of the same stock at regular intervals |
| buy and hold strategy | nvestor buys stocks and holds them for a long period of time, regardless of fluctuations in the market. An investor who employs a buy-and-hold strategy actively selects stocks, but once in a position, is not concerned with short-term price movements and technical indicators |
| Five Stages of Investing | (1) Put and Take Account (2) Beginning Investment (3) Systematic Investing (4) Strategic Investing (5) Speculative Investing |
| Rule of 72 | quick way to evaluate an investment's rate of return/ Take the number 72 and divide it by the annual rate of interest that your money is earning to determine the number of years it will take for your money to double |
| risk averse | afraid to make investments in which one might lose some or all of the investment |
| investments for risk averse people | bonds, mutual funds, blue chip stocks |
| low risk investments | corporate bonds, government bonds, savings bonds, treasury bonds, notes, bills |
| when interest rates go up what happens to the value of bonds? | value of bond goes down |
| public corporation | a company whose shares are traded freely on a stock exchange |
| McDonalds | public corporation |
| medium risk investments | stocks, mutual funds, annuities, real estate |
| high risk investments | futures, options, penny stocks, collectibles |
| advantages of a mutual fund | professional mgrs., don't have to follow stock/bond markets yourself, liquid, diversified, don't need a lot of money to invest |
| when interest rates go down what happens to the value of bonds? | value of bond goes up |
| SEC | Government agency that requires corporations to prepare annual reports |
| bond ratings | Rated on financial condition of issuer including credit worthiness and risk The lower the letter scale, the lower the quality and the higher risk potential AAA the highest D the lowest |
| low risk investments | bonds--corporate and government |
| medium risk investments | stocks, mutual funds, ETF's, real estate, annuities, |
| high risk investments | Penny stock, future, options, precious metals/gem collectibles, |
| reasons for investing | Helps beat inflation, Increases wealth, Fun and challenging |
| penny stock | Low-priced stocks of small companies/Companies have no history of performance/Usually sell for under $1/Companies have low revenues and few assets/Companies growth is questionable |
| mutual fund | A large, professionally managed group of investments |
| ETF | Exchange Traded Funds/Trades like a stock/Doesn’t have its net asset value (NAV) calculated every day like a mutual fund/Diversified – can buy a single share/Expense ratios are lower than a mutual fund. May be cheaper than a mutual fund./Are becoming more and more popular |
| futures | contracts to buy and sell commodities or stocks for a specified price on a specified date |
| options | the right – but not the obligation to buy or sell a commodity or stock for a specified price within a specified time period |
| why invest in bonds | Safe because of fixed interest rate/It’s a loan that issuer must repay/Help diversify investor’s portfolio/Usually are steady investments/Usually react opposite to stock prices/Can help stabilize an investor’s portfolio |
| annual report | A summary of a corporation’s financial results for the year and prospects for the future. |
| NYSE | The largest stock exchange in the U.S. |
| NASDAQ | The second stock exchange in the U.S. It was the first electronic exchange |
| crowfunding | using small amounts of capital from many people to finance a new business venture |
| cryptocurrency | digital currency named for how it's transactions are vertified |
