Chapter 10 - Investing Fundamentals Flashcards
Five reasons to open an RRSP
1) Contributions are tax deductible
2) Savings grow tax free
3) You can convert to a RRIF when you retire to receive regular income
4) A spousal RRSP can reduce your tax bill
5) You can borrow from your RRSP to buy your first home or pay for your education
4 reasons to open a TFSA
1) you area already contributing the full amount to your RRSP
2) You expect your tax rate to be higher when you take money out of your TFSA
3) You need a flexible savings plan
4) You want to reduce taxes on your investments
Primary market
A market in which newly issued securities are traded.
Initial public offering
The first offering of a firm’s shares to the public.
Secondary market
A market which facilities the trading of existing securities
Institutional investors
professionals responsible for managing large pools of money, such as pension funds, on behalf of their clients
Portfolio managers
Employees of financial institutions who make investment decisions
Individual investors
Individuals who invest funds in securities
Day traders
investors who buy stocks and then sell them on the same day
Common stock
a certificate issued by a firm to raise funds that represents partial ownership by the firm
Preferred stock
A certificate issued by a firm to raise funds that entitles owners to first priority to receive dividendsC
Growth stocks
substantial growth opportunities
Value stocks
undervalued by the market for reasons other than the performance of the businesses themselves
Income stocks
Provide investors with periodic income using large dividends
Types of mutual funds
Money Market
Fixed Income
Equity
Balanced
Index
Specialty
Fund of Funds
