Personal Finance Chapter 8 Vocabulary

Question 1

A high-risk investment that might earn a large profit in a short time.

Answer 1

Speculative Investment

Question 2

Profits that are reinvested in a company.

Answer 2

Retained Earnings

Question 3

Money that a business gets from its shareowners in order to operate

Answer 3

Equity Capital

Question 4

The most basic form of corporate ownership, which entitles the owner to voting privileges in the company.

Answer 4

Common Stock

Question 5

Gives the owner the advantage of receiving cash dividends before common stockholders receive any.

Answer 5

Preferred Stock

Question 6

A corporation’s written pledge to repay a specified amount of money, along with interest, to an investor.

Answer 6

Corporate Bond

Question 7

An investment where investors pool their money together to buy stocks, bonds or other investments.

Answer 7

Mutual Fund

Question 8

The process of spreading your assets among several types of investments to reduce risk

Answer 8

Diversification

Question 9

The profit from a sale of an asset such as stocks, bonds, or real estate.

Answer 9

Capital Gain

Question 10

A document that discloses information about a company’s earning, assets, and liabilities.

Answer 10

Prospectus