investing vocab

Question 1

rate of return

Answer 1

the ratio of money gained or lost on an investment relative to the amount of money invested

Question 2

traditional IRA

Answer 2

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

Question 3

security

Answer 3

a financial asset, such as a stock or bond that can be bought and sold in a financial market

Question 4

stock

Answer 4

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

Question 5

401K match

Answer 5

an employer contribution made to their employees retirement plan based on individual employees contributions

Question 6

401k plan

Answer 6

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that allows an individual to save for retirement and have the savings grow well deferring taxes until funds are withdrawn

Question 7

bond

Answer 7

Security in which the investor loans money to a company or government, which event page regular interest to the bondholder, and returned the principal on the bonds maturity date

Question 8

bond rating

Answer 8

a measurement of the likelihood that a bondholder will be paid back

Question 9

capital gain

Answer 9

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

Question 10

coupon

Answer 10

the annual interest payment on a bond usually expressed as a percentage of its dave value

Question 11

diversification

Answer 11

the practice of investing in a large variety of stocks, bonds. And or funds as a way to reduce your overall risk

Question 12

roth IRA

Answer 12

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

Question 13

pension

Answer 13

Retirement account offered in some jobs, actors or companies that employer maintains to give an employee a fixed of payout at retirement

Question 14

Dividend

Answer 14

Money from the prophets of a company that is paid out to his shareholders typically on a quarterly basis

Question 15

Individual retirement accounts

Answer 15

And investing tool for individuals to earmark funds specifically for the retirement

Question 16

Dollar cost averaging

Answer 16

The practice of putting a fixed amount into an investment over a period of time, regardless of the price of that investment

Question 17

Initial public offering

Answer 17

The first time a company becomes publicly, traded by issuing stock that may be bought and sold on the market

Question 18

Dow Jones industrial average

Answer 18

An index that tracks the stocks of a sec group of 30 large well established financially sound companies that are leaders in their industries

Question 19

Large cap stock

Answer 19

A stock with market capitalization over 10 billion

Question 20

Market capitalization

Answer 20

Market value of a companies, outstanding shares, calculated by multiplying the current share price by number of shares outstanding

Question 21

Mid-cap stock

Answer 21

A stock with market capitalization over 1 billion in less than 10 billion

Question 22

Index fund

Answer 22

Alofi, portfolio of stocks, chosen to track or mimic a stock market Index there by removing the human element of investing because no one is choosing the individual stock

Question 23

municipal bond

Answer 23

A bond that often having tax advantages for individual investors, issued by a state or local government, which typically uses the loan to pay for public, works to benefit its citizens

Question 24

Mutual fund

Answer 24

A collection of stocks and bonds combined into one final, which we treated as a unit, typically chosen, and actively managed by an expert in exchange for a fee from each investor

Question 25

NASDAQ

Answer 25

Second largest stock exchange in the world behind the NYSE

Question 26

New York Stock Exchange

Answer 26

The worlds largest stock exchange with its 2800 traded company valued at over 21 trillion

Question 27

S and p 500

Answer 27

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

Question 28

Small cap stock

Answer 28

A stock with market capitalization between 300 million and 1 billion

Question 29

Stock exchange

Answer 29

A Market, where shares in corporations are bought, and sold through an organized system

Question 30

treasury bond

Answer 30

A bond generally considered to be a risk-free investment