Ch 10-12 Flashcards Preview

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Flashcards in Ch 10-12 Deck (71):
1

short term saving needs

expenses beyond regular monthly items

2

long term savings needs

exoenses that are costly and require years of planning and saving

3

principal

amount borrowed/ amount deposited on which interest will be paid

4

interest

earnings on principal

5

compund interest

imterest paid on orginal principal plus interest

6

annual percentage yielf (APY)

financial institutions must tell comsumers

7

commercial banks

full service that provides widest variety of banking services of amy finamcial institution

8

credit union

non profit organization established by employes in occupation who pool their momey

9

brokerage firms

buy and sell types of securites

10

liquidity

measure of how quickly you csn cash without loss of value

11

certificate of deposit

time deposit
earns fixed interest rate for specified time

12

money market account

type of savings account that offeres more competitive interest rate

13

safety of principal

guarenteed not to lose savings deposot
fail/out of business

14

imterest earning potential (yield)

earm as much interest as you can on your deposit

15

fees and restrictions

fees for atms
withdrawal restrictions
minimum balance
service charge
opening account charge

16

inflation

rise in general level of prices

17

rule of 72

technique for estimation number of year to double money

18

stages of investing

consider budget
amounts of risk
income grows exceed expenses you can progress through temporary savings

19

put ans take accounts

take money out as needed

20

initial investment

conservative with low risk

21

systematic investing

making investments on regular and planned basis

22

strategic investing

careful management of investment alternatives to maxamoze growth

23

specualtive investing

make bold, high risk investment chocies

24

investimg risk

chance investment value will decrease

25

diversification

spreading risk among types of investments

26

interest rate risk

inflation will rise faster than return on investment

27

political risk

actions govt takw would reduce value of investments

28

market risk

caused by business cycle periods of economic growth/decline

29

nonmarket risk

unrelated to market trends

30

company/industry risk

owning one company stock

31

temporary investments

be reevaluated within year or less

32

permanent investment

held for the log run 5+ years

33

soureces of financial info

newspapers
financial pages
wall street
investor services
browkrs
advisors
reports
online

34

annual report

summar of corp financial result for year and future

35

bonds

debt obligations of corporation (state/local) govt

36

discount bonds

purchased less than maturity value

37

us treasury bills

cost $100
maturity is a few days to 1 year
t-bills

38

us treasury notes

cost $100
maturity 2, 5, 10 years
t-notes

39

us treasury bonds

costs $100
maturity 30yrs
interest paid every 6 months

40

stocks

take ownership of corporation

41

mutual funds

pooling money from investorys to buy large selecrion of corporations

42

annuity

contract provides regular payments after retirement

43

real estate

house and land

44

futures

contracts to buy and sell commodities and stocks for specified amount on specified date

45

options

not an obligation
right to buy or sell commodities or stock for specified amount in specified period

46

penny stocks

low price stocks with no track record

47

collectibles

collectible material of value

48

stockholders

share/own stock

49

dividends

money paid to stockholders from corporates profits

50

common stock

pays variable dividend and voting rights

51

preferred stock

pays fixed dividend woth no voting roghts

52

income stocks

high dividends

53

growth stocks

reinvest profitd into business to grow

54

blue chip stocks

large establishment corps with solid record

55

defensive stocks

remains stable
pays dividend in economic decline

56

cyclical stock

economy stable/growing but poorly during recessions

57

par value

assigned money value to stock

58

market value

stock price bought and sold

59

four factors that affect stock prices

company
interest rates
market
earnings per share

60

return on investment (ROI)

difference between what you paid and sold it for plus dividends

61

stock index

benchmark investors use to judge performance of investments

62

securities exchange

marketplace brokers who represent investors to buy and sell securites

63

over the counter market (OTC)

securities bought and sold through brokers

64

bull market

rising stock prices and investor optimism

65

bear market

falling stock prices and investor pessismism

66

buying on margin

borrow money from broker to buy stock

67

short selling

selling stock borrowed from broker to be replaced later

68

buy and hold

buy low
keep
sell high

69

dollar cost averaging

systematic purpose of equal dollar amount of same stock at regular intervals

70

direct investment

buying stock directly from a corp

71

dividend investment

using dividens previously earned on stocks to buy more stocks