Mod 4 Business Flashcards
Emergency Fund
A savings accounts containing enough money to help you pay for unexpected expenses without going into debt
Investment Horizon
The number of years until you need to use the money that you have invested
Liquidity
The ease of converting an investment to cash; the easier to convert, the more liquid the investment
Asset Allocation
The process of spreading money across several different types of investments to reduce risk
Capital Preservation
An investment goal aimed at avoiding loss of funds
Large-Cap Stocks
Shares of companies with a market capitalization (i.e, overall equailty value) of more than $10 billion
Makert Capitalization
The total vaule of a company’s equity as measured by multiplying its common share price by the number of common shares outstanding
Blue-Chip Stocks
Select large-cap shares of industry leaders that have provided their shareholders with stable earnings over a number of years
Mutual Fund
A fund that pools money from many investors to purchase a variety of differnet securities and is typically actively managed by a portfolio manager
Exchange-Traded Fund (ETF)
A fun that invests in shares or other securities to track the movement of an index or industrial sector
Index
A select list of securities that generally reflects the performance of a particular type of investment or market
Rate Of Return
The performance of an investment that is measured by divided the dollar amount of the investment gain or loss by the original amount invested; expressed as a percentage
Risk Management
The process of identifying and evaluating risks and selecting and managing techniques to adopt to risk exposures
Peril
A harzard or a source of danger
Speculative Risk
Risk that accompanies that possibility of earning a profit
Self-Insurance
The process of establishing a monetary fund that can be used to cover the cost of a loss
Insurer (or Insurance Company)
A company that agree, for a fee, to assume financial responsibility for losses that may result from a specific risk
Premium
The fee charged by an insurance company
Insurance Poilcy
The contract between an insurer and the person or company whose risk is assumed
Insurance
The protection against loss that the purchase of an insurance policy affords
Insurable Risk
A risk that insurance companies will assume
Uninsurance Risk
A risk that insurance companies will not assume
Principle Of Indemnity
In the event of a loss, an insured organization or individual cannot collect from the surer an amount greater than the actual dollar amount of the loss
The Law Of Large Numbers
Predictions by insurance compnies to calculate premiums based on likelihood that a peril will occur