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Flashcards in 2. Investment and savings planning. Deck (37)
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1
Q

Inducement

A

a thing that persuades or influences someone to do something.
“companies were prepared to build only in return for massive inducements.”

2
Q

Convenience

A

This is a sense of the relative ease with which a financial instrument or institution can be accessed in terms of time and location.

3
Q

Liquidity

A

This is a measure of how quickly a financial instrument can be converted to cash.

4
Q

Reward

A

The benefit or return gained from an investment.

5
Q

Risk

A

The chance of losing money💸

6
Q

Money Market Account (MMA)

A

An interest-bearing account similar to a checking account. Deposits may be added anytime; some of this type of accounts limit the withdrawal depositors may make without penalty

7
Q

Real Estate

A

Property such as land, houses and office buildings.

8
Q

Stocks

A

An ownership share or shares of ownership in a corporation.

9
Q

Bonds

A

A certificate of indebtedness issued by a government or a publicly held corporation, promising to repay borrowed money to the lender a fixed rate of interest and at a specified time. (Government bonds are safer than corporate bonds).

10
Q

Treasury securities

A

Bonds issued by the United States Treasury to investors when the federal government borrows money.
T-bills
T-notes
T-bonds.

11
Q

T-bills

A

treasury bills have maturity of 1 year or less.

12
Q

T-notes

A

Treasury notes have maturity of 1 year to 10 years.

13
Q

T-bonds

A

Treasury bonds have maturity of more than 10 years.

14
Q

Mutual Funds

A

A pool of money used by a company to purchase a variety of stocks, bonds or money market instruments. Provides diversification and professional management for investors.

15
Q

Diversification

A

Indicates building/creating an investment portfolio that includes securities from different asset classes. It spreads risks across various financial investments, reducing the impact that poor returns from anyone investment are likely to have an overall portfolio.

16
Q

Savings

A

Money set aside for future use that is held in easily-accessed accounts, such as savings accounts and certificate of deposit (CD’s)

17
Q

Gift

A

A voluntary present of money or some other valuable asset.

18
Q

Inheritance

A

Money or the assets given to a party upon one’s death, also known as a bequest.

19
Q

Market Gains

A

Proceeds from previous investments in the form of interest payments, dividends (regular distribution of profits) or capital gains (realized income from selling an investment at a higher price than was paid for it).

20
Q

Finance Charge

A

The total cost of credit, including interest and transaction fees.

21
Q

Interest Rate Risk

A

The chance that interest rates may change (upward) while the saver is “locked in” to a (lower) rate for a time deposit ( a CD, for example) or a bond. Also the chance that interest rates may change (downward) while a borrower is “locked in” (higher rate) on a loan.

22
Q

Load

A

A fee charged for purchasing (front-end) or selling (back-end) shares of mutual fund. This fee are usually calculated as a percentage of the amount of the transaction. Some mutual funds are no-loads funds.

23
Q

Social Security System

A

A federal system of old-age, survivors,’ disability and hospital care (Medicare) Insurance which requires employers to withhold (or transfer) wages from employees paychecks and deposit that money in designated accounts.

24
Q

Federal Insurance Contributions Act (F.I.C.A.)

A

a U.S. law that mandates a payroll tax on the paychecks of employees, as well as contributions from employers, to fund the Social Security and Medicare programs. For self-employed persons, there is an equivalent law called the Self-Employed Contributions Act (SECA)

25
Q

Benefits

A

monetary payments paid to workers who have contributed to the system when they are retired or disabled or to their survivors in case of death.

26
Q

Individual Retirement Account (IRA)

A

An account in which an individual may set aside earned income in a tax-deferred savings plan for his or her retirement.

27
Q

401(k) plan

A

A type of retirement savings account allowed in the United States. This account is funded a variety of ways involving contributions from the employee and employer. in some circumstances, fund are contributed pre-tax and the proceeds are taxed upon withdrawal.

28
Q

Pension

A

An account established by a business to fund retirement benefits for its workers. This kinds of funds invest in stocks, bonds, mutual funds, and real estate.

29
Q

Keogh Plan

A

A federally-approved, tax-deferred savings program for self-employed people, allowing them to set money aside for their retirement.

30
Q

Annuity

A

A financial contract where an individual makes a series of payments over time. At an agreed-upon time, the individual stops making payments and begins to receive payments, either for the rest of their life or for a defined period of time.

31
Q

Pre-tax

A

A portion of the wage or salary that has not had taxes withheld prior to being allocated to a retirement plan or other approved benefit.

32
Q

Capital gain

A

A profit realized from the sale of property, stocks or other investments.

33
Q

Dividend

A

A share of a company’s net profits paid to stockholders.

34
Q

Exchange

A

A place for the buying and selling of stocks, bonds or other investments

35
Q

Specialist

A

An individual who works at an exchange and whose job is to make a market when none exist, essentially buying stocks when there is no buyer and selling stocks when there is no seller.

36
Q

Investing

A

The process of putting money someplace in the long term with the intention of making a financial gain.

37
Q

Speculating

A

The process of putting money someplace in the short-term with the intent of making a profit market movement. More risky than investing.