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Selecting Investment

Selecting Investments Vocab

Worddefintition
Diversification An investment strategy in which you spread your investment dollars among industry sectors. Reducing risk by combinding different investments whose prices aren't likely to move in step with another.
Industry A group of companies that make the same products, I.E. pharmaceutical companies.
Portfolio A collection of investments owned by a individual or organization.
Bonds An IOU that a company or government selles when it borrows money. Bonds are called fixed-income investments because they pay you a fixed amount of interest to the bondholder who purchased this IOU.
High-Yield Bonds To attract investors, the issuers of theses bonds pay a higher rate of interest that investment grade bonds with the maturity. They are rated below investment grade bonds and are also called "Junk Bonds".
Issuer An entity which issues and is obligated to pay principal ad interest in a debt security.
Interest Rate Compensation paid or to be paid for the use on money. Interest is generally expressed as a percentage rate. (Also referred to as coupon rate)
IOU Menas exzactly as it sounds "I Owe You". It is an acknowledgement of a debt.
Maturity The date when the principal amount of a security is payable.
Principal The face amount of a bond, payable at maturity. (Also referred to as face or par value).
Trade Date The date when the purchase of a sale or bond is transacted.
Mutual Funds An investment company that pools savers' money to invest in a variety of stocks and bonds. Professionals who research companies and buy or sell stocks activity manage them based on what they think is best for the shareholder.
Created by: munozna
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