Exam 4 Flashcards
Useful investment goals are..
specific and measurable
emergency fund
An amount of money you can obtain quickly in case of immediate need.
speculative investment
A high-risk investment made in the hope of earning a relatively large profit in a short time.
liquidity
The ability to buy or sell an investment quickly without substantially affecting the investment’s value.
municipal bonds
A debt security issued by a state or local government.
general obligation bond
A bond backed by the full faith, credit, and taxing power of the government that issued it.
revenue bond
A bond that is repaid from the income generated by the project it is designed to finance.
corporate bond
A corporation’s written pledge to repay a specified amount of money with interest.
debenture
A bond that is backed only by the reputation of the issuing corporation.
How long do treasury bills have a maturity of?
4-52 weeks
mortgage bond
A corporate bond secured by various assets of the issuing firm.
proxy
A legal form that lists the issues to be decided at a stockholders’ meeting and requests that stockholders transfer their voting rights to some individual or individuals.
stock split
A procedure in which the shares of stock owned by existing stockholders are divided into a larger number of shares.
earnings per share
A corporation’s earnings divided by the number of outstanding shares of a firm’s common stock.
dividend yield
The annual dividend amount divided by the stock’s current price per share.
book value
Determined by deducting all liabilities from the corporation’s assets and dividing the remainder by the number of outstanding shares of common stock.
primary market
Determined by deducting all liabilities from the corporation’s assets and dividing the remainder by the number of outstanding shares of common stock.
Nasdaq
an electronic marketplace for stocks.
account executive
A licensed individual who works for a brokerage firm and buys or sells securities for clients; also called a stockbroker.
market order
A request to buy or sell a stock at the best available price.
dollar cost averaging
A long-term technique used by investors who purchase an equal dollar amount of the same stock at equal intervals.
margin
A speculative technique whereby an investor borrows part of the money needed to buy a particular stock.
selling short
Selling stock that has been borrowed from a brokerage firm and must be replaced at a later date.
option
The right—but not the obligation—to buy or sell a stock at a predetermined price during a specified period of time.
mutual fund
Pools the money of many investors—its shareholders—to invest in a variety of securities such as stocks, bonds, money market instruments, and other assets.
what are the three general types of mutual funds
closed end, exchange traded, and open end
closed end fund
A fund in which shares are issued by an investment company only when the fund is organized.
exchange traded funds
A fund that invests in the stocks or other securities contained in a specific stock or securities index
open end fund
A mutual fund in which shares are issued and redeemed by the investment company at the request of investors.
net asset value (NAV)
(Market value of portfolio less liabilities)/number of shares outstanding
contingent deferred sales load
A 1 to 5 percent charge that shareholders pay when they sell shares in a mutual fund.
