FLC: Investing and Credit Flashcards
Simple Interest
I = PRT
Cmpd Interest
A = P(1 + r/n) ^ (nt)
What is a publicly traded corporation
owndership is dispersed among the general public - is traded on the stock market, offers shares to the public, is required to provide periodic fin statements, and is run by a BoD
Debt investment
Investor loans money to a co or the gov for a fixed period of time and fixed interest rate. AKA a bond
What is a debenture
an unsecured debt investment
When is the best time to borrow money for investing
when the interest rates are falling (duh) and the S&P is rising (so you’ll profit)
Why should you invest in RRSP?
Tax Deduction (to a limit)
When do bond holders get their money back
bond matures or they sell
Rate of Return and yield
when interest is expressed as a % of the original investment
Rate of return
profit of investment over a period of time, expressed as a proportion of original investment. time = typically a year (called annual return)
What is a dividend?
A sum paid regularly (typically quarterly) by co to shareholders out of profits (or reserves)
What is a stock
capital raised by business through issue and subscription of shares
Potential benefit of stock rather than mutual fund
higher return
business cycle
(highest)Boom - (going down)Recession - (bottom)Trough - (going up)Recovery
GIC
Guaranteed investment certificate. Fixed sum of money for specific length at (usually)fixed interest
