| A | B |
|---|
| bond | form of lending to a company or the government |
| dividend | share of profits distributed in cash |
| financial risk pyramid | illustrates the trade-offtween risk and return for a number of saving and investing tools |
| index | group of similar stocks and bonds |
| index fund | mutual fund that was designed to reduce fees by investing in the stocks and bonds that make up an index |
| inflation | the rise in the geneal level of prices |
| inflation risk | the danger that money won't be worth as much in the future as it is today |
| investing | the purchase of assets with the goal of increasing future income |
| investment philosophy | an individual's general approach to investment risk |
| investment risk | the possibility that an investment will fail to pay the expected return or fail to pay a return at all |
| market price | the current price that a buyer is willing to pay for stock |
| maturity date | the specified time in the future when the principal amount of the bond is repaid to the bondholder |
| mutual fund | the specified time in the future when the principal is repaid |
| portfolio diversification | Reduces risk by spreading investment money among a wide array of investment tools |
| rate of return | total return on an investment expressed as a percentage of the amount invested |
| risk | The uncertainty regarding the outcome of a situation/event |
| rule of 72 | Allows a person to calculate when the future value will double the principal amount |
| speculative investments | have the potential for significant fluctuations in return over a short period of time |
| stock | a share of ownership in a company |
| stockholder/shareholder | owner of a stock |
| tax-sheltered investments | eliminate, reduce, defer, or adjust the current year tax liability |
