Chapter 5 - Savings

Question 0

Bonds

Answer 0

Certificate issued by a company or the government in exchange for borrowed funds with the promise to pay a stated rate of interest for a given period of time

Question 1

Stock

Answer 1

Share of ownership in a company

Question 2

Stockholder / Shareholder

Answer 2

People who have invested in a corporation and own a share of it’s stock

Question 3

Stock market

Answer 3

The overall buying and selling activities of stocks throughout a nation (not a actual place)

Question 4

Stock exchange

Answer 4

A building or place where stocks and other securities are bought and sold

Question 5

NYSE

Answer 5

New York Stock Exchange:

The largest stock exchange in the US, located in NYC

Question 6

NASDAQ

Answer 6

National Association of Securities Dealers Automated Quotations:
A system for selling stocks electronically (currently #2 biggest in world)

Question 7

Over the counter market

Answer 7

Electronic purchases and sales of stocks and bonds that take place outside of organized exchanges

Question 8

Stock market indexes

Answer 8

Measure of what is happening to a given set of stocks for a specified list of companies

Question 9

The Dow

Answer 9

Short for Dow Jones Industrial Average:
A group of 30 selected companies whose stock values are averaged to give a general sense of the overall stock market performance

Question 10

S&P 500

Answer 10

Standard & Poor’s 500:
Considered to be a benchmark of the overall US stock market, comprised of 500 Blue Chip stocks representing industrial, transportation, utility and financial companies with a heavy emphasis in industrials. Gives credit rating.

Question 11

Bear market

Answer 11

A market condition in which the prices of securities are falling or are expected to fall

Question 12

Bull market

Answer 12

A financial market of a certain group of securities in which prices are rising or are expected to rise

Question 13

Broker

Answer 13

A person who acts as a go-between for buyers and sellers of stocks and bonds

Question 14

Capital gain

Answer 14

Increase in value of an asset from the time it was bought until time it was sold. Is taxable

Question 15

Capital loss

Answer 15

Decrease in value of an asset from time bought to time sold. Is deductable

Question 16

Dividends

Answer 16

Portion of profits paid to stockholders

Question 17

Diversification

Answer 17

Spreading investment over several different types to lower risk

Question 18

Mutual funds

Answer 18

Investment fund that pool stocks, bonds, and/or other investments. (Basket of stuff) (safer risk/ more conservative than stocks)

Question 19

Certificates of deposit (CD’s)

Answer 19

Time deposits that state the amount of the deposit, maturity date and the rate of interest being paid. (Give us money that you won’t ask back for for a certain amount of time, and we will pay you back with interest after that time. Penalty for asking for money back before said date.)

Question 20

FDIC

Answer 20

Federal depositors insurance corporation:
Government insurance program that insures depositor’s accounts up to $250,000 per account in banks. (Stocks, bonds etc not insured by FDIC)

Question 21

Pension plan

Answer 21

Company plan that provides retirement income for their workers

Question 22

Individual retirement account (IRA)

Answer 22

Retirement plan that allows individuals to save $ for retirement that is not taxed until retirement

Question 23

Keogh plan

Answer 23

Retirement plan for self employed individuals

Question 24

Day trading

Answer 24

The practice of buying and selling securities within the same trading day

Question 25

Commodities trading

Answer 25

An investing strategy that involves the buying and selling of goods that are classified as commodities usually consisting of raw or primary products such as corn, gold or oil. Also known as futures trading.