Savings, Investing, and Risk Management

Key Concepts:

Terms in this set (17)

Bond
An IOU issued by a company, municipality, or the federal government in exchange for a loan from an investor that will be repaid with a set rate of return.
Financial Institution
A business that provides money-related services.
Interest
A fee received or paid for the use of money.
Invest
To commit money to gain a profit or earn interest.
Mutual Fund
A collection of stocks or bonds of various corporations.
Opportunity Cost
The next best alternative given up when making a financial choice.
Pay Yourself First
To automatically save a specified amount from a paycheck for future use.
Principal
The amount of money originally invested.
Risk
The possibility of financial loss or physical harm.
Savings account
An interest-bearing account where people put money for future use.
Stock
A share of a corporation sold to the public.
Loan
A sum of money that is borrowed and expected to be paid back with interest.
Compound interest
Interest on the principal and the accumulated interest on a deposit or a loan.
Simple interest
Interest that is paid only on the original principal.
Insurance Policy
A contract that outlines coverage plans and protects a person against financial loss or damage.
Premium
The amount paid for an insurance policy.
Deductible
Money paid out of pocket before insurance covers the remaining cost.
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