C11: Saving and Investing Options

Question 1

not convertible to cash quickly or without a penalty

Answer 1

illiquid

Question 2

the date on which an investment becomes due for payment

Answer 2

maturity date

Question 3

a fee imposed to discourage depositors from withdrawing the money before the stated time period

Answer 3

early withdrawal penalty

Question 4

a bond that sells for more than its face value

Answer 4

premium bond

Question 5

a bond that sells for less than its face value

Answer 5

discount bond

Question 6

the fixed rate of interest that is paid semiannually for the life of a corporate bond

Answer 6

coupon rate

Question 7

a bond with a clause that allows the issuer to repay the bond before the maturity date

Answer 7

convertible bond

Question 8

a type of corporate bond that is sold at a deep discount, does not provide interest payments, and is redeemable for its face value at maturity

Answer 8

zero-coupon bond

Question 9

tells the investor the risk category that has been assigned to a bond

Answer 9

bond rating

Question 10

a contract in which you make a lump-sum payment or series of payments that earn interest and, in return, receive regular disbursements, often after retirement

Answer 10

annuity

Question 11

a professionally managed group of investments bought using a pool of money from many investors

Answer 11

mutual fund

Question 12

choosing a combination of funds within a single mutual fund company

Answer 12

asset allocation

Question 13

a type of stock that pays a variable dividend and gives owners (stockholders) voting rights

Answer 13

common stock

Question 14

a type of stock that guarantees a fixed dividend but does not provide voting rights

Answer 14

preferred stock

Question 15

an individual retirement account in which contributions are tax-deductible and grow tax-deferred.

Answer 15

traditional IRA

Question 16

an individual retirement account in which contributions are taxed, but earnings are not

Answer 16

Roth IRA

Question 17

a tax-deferred retirement plan for self-employed individuals

Answer 17

Keogh plan

Question 18

a tax-deferred retirement plan for employees offered by businesses that operate for a profit

Answer 18

401(k) plan

Question 19

a tax-deferred retirement plan for employees of schools, government units, and nonprofit organizations

Answer 19

403(b) plan

Question 20

the process of moving a retirement account balance to another qualified account without incurring a tax penalty

Answer 20

rollover

Question 21

an obligation to buy or sell stock or a specific commodity for a set price on a set date in the future

Answer 21

futures contract

Question 22

an item that has the same value across the market with little or no difference in quality among producers

Answer 22

commodity

Question 23

the right, but not the obligation, to buy or sell stock or a commodity for a set price within a set time period

Answer 23

option

Question 24

physical assets that appreciate in value over time because they are rare or desired by many

Answer 24

collectibles

Question 25

physical assets that appreciate in value over time because they are rare or desired by many

Answer 25

collectibles

Question 26

rare metals that have known value around the world

Answer 26

precious metals

Question 27

natural, precious stones such as diamonds, rubies, sapphires, and emeralds

Answer 27

gems

Question 28

a contract that gives you the right to sell a company's products and services

Answer 28

franchise

Question 29

the investor holds legal title to a property and has control over management decisions

Answer 29

direct investing

Question 30

investors have a third person do the actual buying and selling of property

Answer 30

indirect investing