MODULE 7 - types of investments

Question 1

investment you acquire with goal of making money

Answer 1

investment

Question 2

for cash reserve, retirement, tax deductions

Answer 2

why invest?

Question 3

a savings account is a basic type of bank account that allows you to deposit money, keep it safe, and withdraw funds. Also, the money is earning interest at very low rate.

Answer 3

savings account

Question 4

certificates that represent pieces of ownership in a company

Answer 4

stocks

Question 5

when a company chooses to “go public”, the first sale of stock. It occurs in the primary market. The initial sale is when the company is paid. Ex. 1 million shares at $10 each = company receives 10 million dollars

Answer 5

initial public offering (IPO)

Question 6

the initial sale of financial assets in which company receives money during an IPO

Answer 6

primary market

Question 7

transactions that take place after an IPO

Answer 7

secondary market

Question 8

an organized stock exchange in the secondary market in which stock sales occur (located on wall street)

Answer 8

new york stock exchange (NYSE)

Question 9

an organized stock exchange in the secondary market in which stock sales occur. (no physical address)

Answer 9

national association of securities dealers automatic quotation (NASDAQ)

Question 10

one who trades large volumes of stocks on behalf of large institutions

Answer 10

institutional investors

Question 11

people who own stock in company

Answer 11

shareholders

Question 12

the distribution of cash to shareholders

Answer 12

dividends

Question 13

a government agency that regulates and monitors the stock market

Answer 13

securities and exchange commission (SEC)

Question 14

a firm that provides access to stock market

Answer 14

brokerage

Question 15

fee charge by brokerage firm for carrying out transaction

Answer 15

commission

Question 16

offers a reduced level of service, lower costs, and often the ability to trade online

Answer 16

discount brokerage

Question 17

a promissory note to repay a certain amount of money at some future point

Answer 17

bond

Question 18

issued by the US treasury department to finance the debt of the government

Answer 18

treasury bonds

Question 19

issued by federal agencies whose proceeds are used to buy mortgages to encourage home ownership

Answer 19

federal agency bonds

Question 20

issued by state and local governments to finance large public projects such as water and sewer systems

Answer 20

municipal bonds

Question 21

bonds issued by large company–they have all degrees of risk depending on the strength of corporation

Answer 21

corporate bonds

Question 22

sells shares to investors in order to collect pool of money that is then used to buy various investments. Very popular in our society today

Answer 22

mutual funds

Question 23

the process of investing in multiple investments

Answer 23

diversification

Question 24

a savings account that holds a fixed amount of money for fixed period of time, such as six months, one year, or five years, and in exchange, the issuing bank pays interest. When you cash in or redeem your CD, you receive the money you originally invested plus the interest.

Answer 24

CDs

Question 25

the 401K and roth 401K plans provide employees with an automatic way to save for their retirement while benefiting from tax breaks. the reward to employees who participate in these programs is they essentially receive free money when their employers offer matching contributions.

Answer 25

employer-sponsored savings plans

Question 26

is an item of economic, commercial, or exchange value that has a material existence. For most businesses, physical assets usually refer to properties, equipment, and inventory.

Answer 26

physical assets

Question 27

are objects that come out of the Earth such as wheat, cattle, soybeans, corn, oranges, gold, uranium, copper, aluminum, coals, cotton, and oil most, but not all, commodities trade on what is known as commodities exchange such as the chicago board of trade (CBOT) or the New york mercantile exchange (NYMEX). In this way, you can buy and sell commodities in similar way as stocks.

Answer 27

commodities