Vocab

Question 1

Quarterly payout of profits by a company to all shareholders

Answer 1

Dividends

Question 2

For a mutual fund, an annual percentage the fund takes as payment. Expense ratios of different funds can be compared to find the best value.

Answer 2

Expense ratios

Question 3

The FDIC (Federal Insurance Corporation) is a government agency that insures depositors’ money. Banks and savings and loan companies that are FDIC insured pay a percentage of their deposits to the FDIC to pay for the insurance.

Answer 3

FDIC Insured

Question 4

Fees paid to the mutual fund company as an entry requirement into certain mutual funds.

Answer 4

Front End Loan

Question 5

Rise in prices that effectively makes cash have less buying power.

Answer 5

Inflation

Question 6

A safe, low return investment available from banks. There is generally no minimum deposit for this type of account, making it perfect for kids and teens just starting out.

Answer 6

Savings account

Question 7

On a mutual fund statement, a comparison of how the fund has done compared to its value on the first of the year.

Answer 7

Year to date return

Question 8

For a savings account, the percentage of interest earned annually. For a stock, the annual dividend divided by the share price.

Answer 8

Yield

Question 9

Separate types of investments, such as stocks/stock mutual funds, bonds/bond funds, money market accounts, and international stocks/international stock funds. Each asset class has typical risks and returns, and a certain investment within that class may perform better or worse than it peers.

Answer 9

Asset Class

Question 10

When you sell a stock for more than you paid for it, the difference is called a capital gain. Capital gains are income that must be reported on taxes.

Answer 10

Capital Gain

Question 11

When what you sell a stock for is less than what you originally paid for the stock, the difference is called a capital loss.

Answer 11

Capital loss

Question 12

A share in a company’s assets and profits. The ownership of a publicly traded company is split up into the shares of stock being traded and held.

Answer 12

Common stock

Question 13

Money paid by a corporation to each shareholder. Typically given four times a year, these distributions of company profits can be used to reinvest in more shares of the company.

Answer 13

Dividend

Question 14

A mutual fund or account that invests in short-term, liquid investments. These funds generally pay better than a savings account with a bank, but less than a typical stock mutual fund. These funds are considered very low risk.

Answer 14

Money market

Question 15

A mutual fund is a pool of stocks, bonds, and other securities managed by an investment company. Individuals can buy shares of the fund and profit from its investment gains.

Answer 15

Mutual fund

Question 16

An incorporated business that does not trade shares of stock on an open market. It is owned privately, typically by a small number of people.

Answer 16

Private corporation

Question 17

The annual amount of money an investment makes, given as a percentage. For example, a $100 investment that is worth $112 the next year had a 12% return.

Answer 17

Rate of return

Question 18

The chance that an investment may lose value. Less risky investments have a lower rate of return.

Answer 18

Risk

Question 19

Monetary increase that an investment makes. If an investment loses value, it is called a negative return.

Answer 19

Return

Question 20

A time with generally falling stock prices.

Answer 20

Best market

Question 21

Stocks issued by solid and reliable companies with long records of growth and stability. These stocks usually pay small but reliable dividends and maintain a steady stock price.

Answer 21

Blue chip stock

Question 22

Fees paid to the mutual fund company when selling a mutual fund.

Answer 22

Back end loans

Question 23

Money loaned to the government, corporations, or municipalities that pays the investor interest. Different types of bonds can be more or less risky, and bonds can have high yields or low yields (interest rates).

Answer 23

Bonds

Question 24

A time with generally rising stock prices.

Answer 24

Bull market

Question 25

Stocks of companies that produce such staples as food, beverages, and pharmaceuticals, and insurance companies. These businesses may not grow enormously fast, but they should keep their value relatively constant.

Answer 25

Defensive stock

Question 26

owning a collection of investments such as stocks from different industries and small large companies, bonds, and money market funds for cash, in order to spread risk and have a safer investment overall.

Answer 26

Diversification

Question 27

Stocks of companies that generally do not pay dividends or pay only very small dividends. These companies plow their profits back into growing the business. They can be new and entrepreneurial companies, and can experience high growth or financial failure.

Answer 27

Growth stock

Question 28

The collection of investments you personally hold including stocks, bonds, money market accounts, and saving accounts.

Answer 28

Investment portfolio

Question 29

Stocks of very large companies such as Walmart, general electric, and IBM, that have a market capitalization of between $10 billion and $200 billion

Answer 29

Large cap stocks

Question 30

A collection of investments tailored to your investment risk tolerance and time horizon. Any plan only works as well as your ability to stick with it, including sometimes selling ‘winners’ to keep your overall spread of investments to where you want it to be.

Answer 30

Personal investing plan

Question 31

stocks of largely unknown companies with smaller market capitalization, that is, dollar value of total stock ownership. Small-cap stocks generally have a market capitalization of between $300 million and $2 billion

Answer 31

Small cap stock