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Ch 2 Voc Test
Economics Chapter 2 Vocabulary Terms
| Term | Definition |
|---|---|
| Aggressive Growth Stock Mutual Fund | mutual fund that seeks to provide max long-term capital growth from stocks of primarily smaller companies or narrow market segments; small cap fund |
| annuities | a type of investment where the money is guaranteed by an insurance company; a savings plan through an insurance company |
| bond | a debt instrument where a company owes you money the rate of return on these is low |
| CD | Certificate of Deposit usually at a bank; this is just a savings account with a little higher interest rate because you are agreeing to tie up your money for a little while |
| commodity | food, metal, or another fixed physical substance that investors buy or sell, usually via futures contracts |
| diversification | to spread around, thus lowering one’s risk. Spreading your money among different classes of financial assets and among the securities of many issuers |
| dividend | stock profits that are paid out to shareholders |
| fixed annuity | a type of annuity that guarantees a certain rate of return – for example 6%; these are usually low and are not recommended for long-term wealth building |
| futures | term used to designate all contracts covering the sale of financial instruments or physical commodities for future delivery on a commodity exchange |
| investments | where one would put their money for long-term growth (suggested min. of 5 years) |
| Growth Stock Mutual Fund | funds that buy stocks in companies that are medium in size; they have grown, but are still expanding; also called Mid-cap funds |
| large-cap fund | type of funds that contain large, well established companies |
| liquidity | the availability of money; as there is more liquidity, there is typically less return. The quality of as asset that permits it to be converted quickly to cash without loss of value |
| mid-cap fund | a mutual fund containing a group of medium-sized companies that are growing |
| money market | utilized for borrowing and lending money for three years or less. A mutual fund that seeks to maintain a stable share price and to earn current income by investing in interest-bearing instruments with short-term (usually 90 days or less) maturities |
| mutual fund | pools of money that are managed by an investment company; they offer investors a variety of goals, depending on the fund and its investment charter |
| portfolio | a list of your investments |
| rental real estate | buying real estate to rent out as an investment; make sure you have plenty of cash before doing this |
| risk | degree of uncertainty of return on an asset; in business, the likelihood of loss of reduced profit |
| risk return ratio | relationship of substantial reward corresponding to the amount of risk taken |
| savings account | accounts at financial institutions that allow regular deposits and withdrawals; the minimum required deposit fees charged, and interest rate paid varies among providers |
| share | a piece of ownership in a company stock or mutual fund |
| single stock | buying ownership in one company – the problem with single stocks is you are not diversified; there is a high degree of risk in single stocks |
| small-cap fund | a mutual fund that invests in companies whose market value is less than about $1 billion |
| speculative | purchasing risky investments that present the possibility of large profits, but also pose a higher-than-average possibility of loss |
| track record | the past history of something; with investments, check at least the 5 or 10 year track record |
| variable annuity | an annuity that has a varying rate of return based on the mutual funds you have invested in; this is better than the fixed annuity |
Created by:
NickPriceEllis
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