Unit 4 Vocab

Question 1

The tendency to attribute greater accuracy to the opinion of an authority figure (unrelated to its content) and be more influenced by that opinion

Answer 1

Authority Bias

Question 2

A security in which the investor loans money to a company or government, which then pays regular interest to the bondholder and returns the principal on the bond’s maturity date

Answer 2

Bond

Question 3

An account that lets individual investors trade stocks, bonds, mutual funds, and other investments

Answer 3

Brokerage Account

Question 4

Profit from the sale of an asset, such as a stock or a bond, calculated by subtracting the price you initially paid from the price you then sold it for

Answer 4

Capital Gain

Question 5

The process of comparing various factors for a product or service before making a purchasing decision

Answer 5

Comparison Shopping

Question 6

A dark pattern where the option to decline an offer is worded to shame the user into compliance

Answer 6

Confirmshaming

Question 7

The practice of investing in a large variety of stocks, bonds, and/or funds as a way to reduce your overall risk

Answer 7

Diversification

Question 8

Money from the profits of a company that is paid out to its shareholders, typically on a quarterly basis

Answer 8

Dividends

Question 9

A collection of stocks and/or bonds that are traded on securities exchanges. Unlike mutual funds, they can be traded throughout the day like an individual stock.

Answer 9

Exchange-Traded-Fund (ETF)

Question 10

A government organization whose role is to protect consumers and competition by preventing anti-competitive, deceptive, and unfair business practices through law enforcement, advocacy, and education

Answer 10

Federal Trade Commission (FTC)

Question 11

When someone steals your personal information to commit fraud such as applying for credit, filing taxes, or obtaining medical services

Answer 11

Identity Theft

Question 12

A person who is able to generate interest in something (such as a consumer product) by posting about it on social media

Answer 12

Influencer

Question 13

A low-fee portfolio of stocks chosen to track or mimic a stock market index, thereby removing the human element of investing because no one is choosing the individual stocks

Answer 13

Index Fund

Question 14

A collection of stocks and/or bonds combined into one fund which will be traded as a unit, typically chosen and actively managed by an “expert” in exchange for a fee from each investor

Answer 14

Mutual Fund

Question 15

Benevolent behavior, usually in the form of charitable gifts, toward others in society

Answer 15

Philanthropy

Question 16

A type of scam in which personal information is requested, typically through an illegitimate email

Answer 16

Phishing Scam

Question 17

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs

Answer 17

Portfolio

Question 18

A calculation that estimates the number of years it takes to double your money at a specified rate of return

Answer 18

Rule of 72

Question 19

An illicit business model where profits are based on the investor’s ability to recruit other individuals who are enrolled to make payments to their recruiters. Generally, neither a product or service is delivered.

Answer 19

Pyramid Scheme

Question 20

The ratio of money gained or lost on an investment relative to the amount of money invested; also known as return on investment (ROI)

Answer 20

Rate of Return/ROI

Question 21

An individual retirement account that allows a person to set aside after-tax income up to a specified amount each year

Answer 21

Roth IRA

Question 22

The tendency to assume things that are scarce are valuable and things that are abundant are not

Answer 22

Scarcity Bias

Question 23

The tendency to behave in a particular way because others are doing so

Answer 23

Social Proof Bias

Question 24

An index of 500 large cap companies chosen based on their size, industry, and other factors, used to represent the entire market

Answer 24

S&P 500

Question 25

A share of the value of a company, which can be bought, sold, or traded as an investment and which gives the investor small partial ownership of the company

Answer 25

Stock

Question 26

An individual retirement account that allows a person to set aside pre-tax income up to a specified amount each year

Answer 26

Traditional IRA

Question 27

A retirement savings plan, sponsored through your employer who will often match your contributions, that allows an individual to save for retirement and have the savings grow while deferring taxes until funds are withdrawn

Answer 27

Traditional 401(k) Plan

Question 28

Factors such as authority, liking, or scarcity that have an effect on the way we make decisions

Answer 28

Ways of Influence