FLC: Investing and Credit Flashcards
(29 cards)
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
What is diversifying
spreading investments over several industries to reduce risk
Why does real estate have the most potential for capital gain?
no other options have possibility for capital gain
What is capital gain
profit from sale of property or investment
Why GIC versus savings account?
GIC has a higher interest rate
Historically, the best performing asset class in NA is.
stocks
Canadian Fixed Income mutual fund is good for…
stability??? idk
how is term deposit similar to GIC
both pay fixed rate of interest. this isnt true…
3 c’s of credit
character (reputation), capacity (ability), and capital (assets)
advantage of credit
instant enjoyment. can make larger purchases.
