BF-M6 Flashcards
INTRODUCTION TO INVESTMENT (40 cards)
An _____ is an asset or item that purchased with the hope that it will generate income or will appreciate in the future.
investment
In finance, it is a monetary asset purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit.
investment
The act committing money or capital to an endeavor with
the expectation of obtaining an additional income or profit
INVESTING
5 DIFFERENT TYPES OF INVESTMENT
- BONDS
- STOCKS
- MUTUAL FUNDS
- MONEY MARKET ACCOUNT
- EXCHANGE TRADED FUND
A debt instrument, a bond is essentially a loan that you are giving to the government or an institution in exchange for a pre-set interest rate paid regularly for a specified term.
BONDS
A type of investment that gives you partial ownership of a
publicly traded company.
STOCKS
An investment vehicle that allows you to invest your
money in a professionally-managed portfolio of asset that, depending on the specific fund, could contain a variety of stocks, bonds, market related indexes, and other investment opportunities
MUTUAL FUNDS
A type of savings account that offers a competitive rate of interest (real rate) in exchange for larger than normal deposits
MONEY MARKET ACCOUNT
are funds sometimes referred to as baskets or portfolios of securities that trade like stocks on an exchange.
EXCHANGE TRADED FUND
When you purchase an ___, you are purchasing shares of the overall fund rather than actual shares of the individual underlying investments.
ETF
3 INVESTMENT STRATEGIES
- ALLOCATION OF FUND
- DIVERSIFICATION
- DOLLAR/PESO COST AVERAGING
Also known as asset allocation, this term refers to the types of investments / asset categories you own and the percentage of each you have in your investment portfolio
ALLOCATION OF FUND
This is a risk management technique that mixes a wide variety of investments to potentially minimize your investment risk.
DIVERSIFICATION
An investment strategy used whereby an investor purchase fixed investment amounts at predetermined times, regardless of the price of the investment
DOLLAR/PESO COST AVERAGING
A long-term asset such as land or a building that is not
purchased or sold in the normal course of business.
CAPITAL ASSETS
Profit or loss from the sale of an asset.
CAPITAL GAIN OR LOSS
The amount by which the value
of an asset increases or decreases compared to the amount you paid for it. You receive the capital gain or loss when you sell the asset.
CAPITAL APPRECIATION/DEPRECIATION
A distributions of a portion of a company’s earnings,
decided by the board of directors, toa class of its shareholders.
DIVIDENDS
A portfolio of securities representing a particular market or industry or a portion of it. Indices often serve as benchmarks for measuring investment performance.
INDEX
An account that allows you to borrow money from your
brokerages account to purchase securities. The loan is collateralized by the existing
securities and cash held in the account.
MARGIN ACCOUNT
A document filed with the SEC that describes an offering of securities for sale to the public. The prospectus fully discloses the risk, policies, and fees of
the offering.
PROSPECTUS
The income return on an investment. This refers to the interest or dividend received from a security based on the investments cost or face value
YIELD
9 TYPES OF INVESTMENT RISK
- MARKET RISK
- LIQUIDITY RISK
- CONCENTRATION RISK
- CREDIT RISK
- REINVESTMENT RISK
- INFLATION RISK
- HORIZON RISK
- LONGETIVITY RISK
- FOREIGN INVESTMENT RISK
These risk of investments declining in value because of
economics developments of other events that affects the entire market.
MARKET RISK
