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Terms in this set (30)
Market value of all of a company's outstanding shares, calculated by multiplying the Current Share Price by Number of Shares.
Money from the profits of a company that is paid out to its shareholders (typically, on a quarterly basis).
An index that tracks 30 large, generally successful and reliable companies.
An index of 500 large cap companies chosen based on 8 factors, including market capitalization, location, and industry.
Measure the likelihood that a bondholder will be paid back. The higher the rating for a bond, the lower the coupon rate for that bond.
The interest payment on a coupon bond. Example: A $1,000 bond with a 5% coupon would pay the bond investor $50 per year until maturity
A debt security in which the issuer (company or government) owes the holders (or investor) a debt and, depending on the terms of the bond, is obliged to pay the bondholder interest (the coupon) and/or to repay the principal at a later date, termed the bond maturity.
Bonds issued by the U.S. Treasury with a maturity of more than 10 years; generally considered risk-free investments.
Bonds issued by state and local governments which often have tax advantages for individual investors.
Spreading your money into a variety of asset classes, with multiple investments or indexes in each asset class, so that your investment is not reliant on the success of one company. Diversifying minimizes risk.
New York Stock Exchange -- the world's largest stock exchange.
The second largest stock exchange in the world behind the NYSE.
A share of stock represents a fractional ownership of a company, which an individual buys in hopes of earning money and a company issues in order to raise funds.
A collection of stocks and/or bonds, typically chosen and actively managed by an "expert" in exchange for a fee from each investor.
A low-fee portfolio of stocks chosen to track or mimic a stock market index, thereby removing the human element of investing.
Degree of uncertainty on how likely the investor is to make money on an investment.
Rate of Return
The ratio of money gained or lost on an investment relative to the amount of money invested; also known as return on investment (ROI).
Initial Public Offering (IPO)
The first time a company issues stock that may be bought by the general public.
The increase in the general price of goods and services in an economy over a period of time.
Interest earned on both the principal amount and any interest already earned.
A market where shares in corporations are bought and sold through an organized system.
A financial asset—such as a stock or a bond—that can be bought and sold in a financial market.
A United States federal program of social insurance and benefits developed in 1935. The Social Security program's benefits include retirement income, disability income, Medicare and Medicaid, and death and survivorship benefits.
The Federal Insurance Contributions Act (FICA) is the federal law that requires an employer to withhold three separate taxes from the wages they pay their employees: a 6.2 percent Social Security tax;
a 1.45 percent Medicare tax and beginning in 2013, a 0.9 percent Medicare surtax when the employee earns over $200,000.
A pension is a retirement account that an employer maintains to give an employee a fixed payout at retirement.
An individual retirement account that allows a person to set aside after-tax income up to a specified amount each year. Both earnings on the account and withdrawals after age 59½ are tax-free.
An individual retirement account that allows a person to set aside pre-tax income (up to a specified amount). Earnings are tax-deferred but taxes are paid when withdrawals are made beginning at age 59 1/2 or later (or earlier, with a 10% penalty).
401(k) Retirement Plan
A retirement savings plan sponsored by an employer which lets workers save and invest a piece of their paycheck before taxes are taken out. Taxes aren't paid until the money is withdrawn from the account.
The technique of buying a fixed dollar amount of a particular investment on a regular schedule, regardless of its price. More shares are purchased when prices are low, and fewer shares are bought when prices are high.
An employer contribution made to their employees' 401(k) plan based on individual employee's contributions. An employee must contribute to the plan in order to receive a match from his/her employer.
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