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Financial Literacy > New Investor > Flashcards

New Investor Flashcards

1
Q

Asset

A

Anything of REAL value that a person owns such as stocks, real estate, or cash. (Opposite of labilities: clothes, shoes, cars, most jewelry)

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2
Q

Bond

A

-An IOU (I owe You). Money lent to a corporation or government in exchange for interest payments and repayment of the principal at maturity.
-Investing in a bond makes you the lender. The borrower pays you back interest like you might do with a mortgage loan or credit card company.

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3
Q

Capital Gain

A

The money made from selling an asset for more than you paid for it.

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4
Q

Dividend

A

-A portion of a company’s earnings given to shareholders (per share)
-Typically paid on a quarterly basis.

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5
Q

Equity

A

-Ownership in a company, typically represented by stock.

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6
Q

Shareholder

A

-Owner of a stock.

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7
Q

Mutual Fund

A

-A managed portfolio that allows investors to pool money to buy stocks. (Active Strategy)

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8
Q

Index Fund

A

A fund designed to replicate the performance of a particular market index. (Ex: S&P 500 Index)

An index fund can be a Mutual fund or ETF.

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9
Q

Portfolio

A

A collection of investments held by an individual or institution.
(Ex: Stock Portfolio or Real Estate portfolio)

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10
Q

Risk

A

The potential of losing some or all of an investment.

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11
Q

Stock

A

A share in ownership of a company.

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12
Q

Volatility

A

The degree of change in the price of an asset over time.

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13
Q

Yield

A

The income return on an investment, typically shown as a percentage.
Ex: 10% Yield

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14
Q

Bull Market

A

Stock market prices are going up.

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15
Q

Bear Market

A

Stock market prices are going down.

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16
Q

Compound Interest

A

Interest earns its own interest.

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17
Q

Diversification

A

Spreading assets to reduce risk.
Example: Investing in stocks and real estate.

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18
Q

Dollar Cost Averaging

A

Investing a small amount of money on a scheduled basis regardless of prices in the stock market.

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19
Q

Exchange Traded Fund (ETF)

A

Baskets of stocks sold as one transaction and traded throughout the day in the stock market.

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20
Q

Liabilities

A

Things that take money out of your pocket: cars, clothes or shoes. (Opposite of Assets: stocks and real estate)

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21
Q

Passive Income

A

Income earned from little to no effort.
Ex: Dividends or interest

22
Q

Ticker Symbol

A

Alpha-Numeric Symbol used to represent stock/fund name. Example: AAPL
(Apple) AMZN (Amazon), Facebook (META)

23
Q

Invest

A

Holding asset for LONG-TERM in anticipation of profit.

24
Q

Individual Retirement Account
(IRA)

A

. Accounts designed to help you invest for retirement on your own.

25
Q

Return on Investment
(ROI)

A

Money earned on an initial investment. Typically expressed as a percentage.
Example: $10 earned on $100 would be a 10% ROI.

26
Q

Entry Point

A

The price that you buy an asset.

27
Q

Exit Point

A

The price that you sell an asset.

28
Q

Equity

A

The value owned in an asset. In a company, it is typically represented by stock shares.

29
Q

Inflation

A

The process of the value of your money decreasing while prices increase.

Example: Spending $100 one month in the grocery store, then spending $100 the next month and only getting half as much food.

30
Q

Liquidity

A

The ease that an asset can be converted to cash without affecting its value.

-Example: Stocks are liquid because they can easily be sold for cash.
Real Estate is NOT liquid because it takes more work and time to convert it to cash.

31
Q

Spread

A

The difference between the bid price and the ask price of a stock.

32
Q

Nasdaq

A

A major stock exchange focused on technology companies.

33
Q

Dow Jones Industrial Average
(DJIA)

A

: 30 established companies with solid returns; considered leaders in industry. (Apple, Coca-Cola, John Deer)

34
Q

S&P 500

A

The top 500 companies by market cap. (Home Depot, Tesla, Google)

35
Q

Initial Public Offering
(IPO)

A

Also referred to as “Going Public”
When a private company sells shares to the public for the first time.

36
Q

Maturity

A

The date your final payment is due such as in a bond or loan.

37
Q

Expense Ratio

A

The annual fee charged by a fund, expressed as a percentage of its assets.
(Ex:0.20% is $2.00 per 1,000)

38
Q

Capital

A

-The TOTAL amount of money, assets, or investments used or available to earn income or profit.

39
Q

Principal

A

The ORIGINAL amount of money invested OR borrowed before any earnings, interest, or returns are added.

40
Q

Market-Capitalization

(Market-Cap)

A

Total value of all of company’s shares of stock.

Market Cap= SharePrice ×All company shares.

41
Q

Blue Chip

A

-Well-established, financially stable, and known companies with a history of reliable performance, typically a leader in its industry.
(Example: Walmart, AMEX)

42
Q

Brokerage

A

An institution that serves as the middleman between buyers and sellers for stocks, bonds, and mutual funds.

43
Q

Stock Market

A

-A collection of markets where investors buy and sell shares of publicly traded companies.
-It helps companies raise capital and investors earn profits by trading stocks. (Think of the stock market as a mall.)

44
Q

Holdings

A

Companies in an ETF or mutual fund

45
Q

52-Week Range

A

An asset’s price including the lowest price in 52 weeks and the highest price.

46
Q

Bid Price

A

The highest price a buyer will pay for a stock.

47
Q

Ask Price

A

The lowest price a seller will sell a stock.

48
Q

Profit

A

Financial gain after the expenses required to sustain an activity are subtracted from income earned.

49
Q

Stock Exchange

A

A specific marketplace where investors buy and sell stocks, bonds, and other financial instruments.
(Think of the stock exchange as a store IN the mall (Stock market)
Ex: NYSE, London

50
Q

Trading

A

Holding asset for SHORT-TERM in anticipation of profit.

Financial Literacy (2 decks)

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