Upgrade to remove ads
FINANCE 101 Terms
Finance stuff and managing money.
Terms in this set (56)
Run by parent companies that make all the trading decisions, most popular in United States
Reduction of risk by spreading investment dollars over numerous stocks or bonds to minimize the impact should one of the investments turn bad
Automatically buys more shares of the fund. Uses profits to build your stake in the fund. Still must pay taxes on earnings in most cases.
Dollar Cost Averaging
Investing a fixed amount on a regular basis in a mutual fund, usually monthly and through an automatic debit to your bank account. This method means you buy fewer shares when prices are high, and more when prices are low.
Individual Retirement Accounts
Most mutual funds offer a variety of these that may even have a lower initial deposit than regular investment accounts.
Legal document required by the Securities and Exchange Commission that details all the info investors need to know, including the risk involved.
Net Asset Value
The daily value of a mutual fund that includes all the assets minus the fund's liabilities converted to a per-share price.
Closed-End Mutual Fund
A fund that trades on stock exchanges like common stock. A fixed number of shares are issued and the value of the fund is more a function of supply and demand.
Open-end Mutual Funds
Largest number of funds on the market. Issue new shares when someone wants to buy into the fund, rather than matching an existing shareholder that wants to sell.
Result when an asset is sold for profit.
Actively Managed Mutual Fund
Open-end funds that employ a portfolio manager who buys and sells stocks and bonds in an attempt to post a better return than the market.
Passively Managed Funds
Include index funds where the managers buy stocks or bonds that match the composition of popular stock and bond indexes.
The number of shares outstanding multiplied by the per share price.
Special type of stock that companies issue that have limited rights on voting on company business, but still pay a steady dividend that attracts investors.
Percentage of your portfolio occupied by stocks and bonds.
Tax-free Money Market Funds
Invest in securities that generate tax-free income.
Includes any dividends, capital gains, and interest income received from a mutual fund investment.
Mutual fund that is broad based and central to an investor's investment strategy.
Usually means profits.
Securities and Exchange Commission
Main regulatory agency responsible for monitoring the stock markets and securities industry.
Large financial institutions that handle the initial distribution of shares during an IPO.
Employee of a member firm of the NYSE. This investment professional is responsible for maintaining a market in a particular stock.
These make a market for a stock they cover by providing a quote at which they would buy or sell the stock.
Exchange traded funds (ETFs)
Similar to mutual funds in that they are baskets of stocks or bonds, but they are traded on the open market like stocks.
Cash payments to shareholders by companies.
A marked decline in the prices of goods and services.
Earnings per Share (EPS)
A way of reporting earnings or profits on a per share of stock.
Real Estate Investment Trusts
Closed-end funds that invest in real estate and mortgages.
Tangible assets such as stocks, bonds, cash, real estate, and other types of assets.
Give the owner the right but not the obligation to buy a certain number of stock shares at a fixed price on or before a certain date regardless of market price. Employers often use these as incentives.
The price specified in the option that the owner can pay for shares of stock.
Time period set by management for the options to become valid.
Amount paid by the bond at maturity.
When a bond reaches the end of its financial life and the face value or principal is returned to the owner.
A rise on the cost of goods and services with a corresponding decrease in the value of money.
This means that the issuer must pay the owner the full face value of the bond.
Reducing the number of employees at a company, sometimes by offering early retirement.
Qualified Retirement Accounts
Designated by the IRS for special treatment, such as tax-deferred growth, while funds remain in the account. Example: an IRA.
The term the IRS uses to designate how money coming out of most retirement plans will be taxed. Means the funds will be taxed as if you were earning them like a salary.
Your salary before any taxes, insurance payments, or any other deductions.
What your dollars will buy relative to another point in time.
Time Value of Money
The concept that a dollar today is better than a dollar tomorrow.
The mathematical means by which interest earned during one period adds to the principal investment, then the next period interest is earned on the resulting principal plus interest after the first period.
The social security, Medicare, and income tax withheld each payday by your by your employer.
Medical situation that existed before you applied for any type of insurance.
Defined Benefit Plan
Calculates retirement benefits using a formula that applies a percentage to an average salary and adds in a longevity bonus. This gives employees a monthly benefit for the rest of their lives.
Cash Balance Pensions
Similar to defined benefit plan except there is no reward for longevity and employees can take the plan with them to new jobs.
A contract with a life insurance company guaranteeing a certain payout over a period. May contain a death benefit.
Defined Contribution Plans
Provide the employee an opportunity to invest pre-tax money deducted on a regular basis in a group of mutual funds and other investments. Employer may match part of the employee's contribution.
Qualified defined contribution plan offered by employers, that allows employees to have a certain percentage of their salary deducted and invested in the plan.
Retirement plan for religious, educational, and other non-profit groups.
Investment vehicles that allow principal and interest to grow without paying taxes on the earnings until someone in the future withdraws the funds.
A person that maintains the account and keeps records of deposits and withdrawals.
Adjusted Gross Income (AGI)
First cut at adjusting your gross reported income.
Another name for any retirement plan that takes its contribution before withholding taxes are calculated.
Prime Interest Rate
The rate banks charge their very best customers.
THIS SET IS OFTEN IN FOLDERS WITH...
General Finance Terms
Small Business Management compend
Personal Finance | Chapter 1 | Chapter 2 | Chapter…
YOU MIGHT ALSO LIKE...
Finance Ch. 11-16
Econ and Personal Finance: Terms: Chapters 11-15
Jachym: Personal Finance Chapter 7 Review
OTHER SETS BY THIS CREATOR
OTHER QUIZLET SETS
CNA UNIT 1 QUIZ
HUBS192: Acid-Base Balance
aphg unit 6 retake