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61 Cards in this Set
- Front
- Back
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what is investing?
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The act of committing money or capital to an endeavor with the expectation of obtaining an additional income or profit.
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4 common ways money is invested?
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stocks, bonds, mutual funds, and real estate
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An investment vehicle is
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a way to invest
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Difference between investing and gambling
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gambling takes no thought, investing is an educated guess both have risk
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two things required for compounding to work?
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re-investment and time
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The shorter your time horizon,
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the more conservative your investment should be
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2 most common investing strategies
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growth investor and value investor
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Any securities that are founded on debt?
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bonds
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a combination of different investment assets mixed and matched for the purpose of achieving an investor's goal
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portfolio
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2 kinds of stock
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common and preffered
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Explain preferred stock
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the company can call the stock back at anytime. it is insured dividends, in between bonds and equity
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When was the NYSE founded?
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1792
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Where is the Nasdaq?
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its virtual
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AMEX is
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where small cap trade takes place
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A companies worth =
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stock price times number of stocks
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Most important factor that effects stock price?
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earnings
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Why do stock prices change?
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we don't know
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2 main ways to purchase stock?
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using a broker and dripsand dips
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Drips and dips =
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Dividend reinvesting programs and direct investing programs
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Chickens and pigs
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chickens= scared to lose $, pigs= throw money around waiting for one big investment
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4 advantages to mutual funds?
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professional management, Diversification, liquidity, simplicity
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3 disadvantages
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professional management, costs, and taxes
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3 kinds of mutual funds?
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equity, fixed income, and money market
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why are mutual funds not so good?
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costs!
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2 types of mutual fund fees?
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yearly fees and transaction fees
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should you buy a fund with a load?
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hell no
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what is nav. Equation
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Net asset value = funds assets - liabilites
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A loan that is killed over time
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amortization
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compounding will lead to the ___ ____ and discounting leads to
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fv, pv
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the more frequent the compounding, the
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larger the fv
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most important method of how to get started on investing?
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pay off high interest rate debt CREdit caRDs
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3 investment options
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bonds stocks realestate
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total return on the investment =
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gain from sale + dividends
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Where is the best average return? worst?
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small company stocks, short term treasury bills.
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A LT debt instrument in which a borrower makes payments of principal and interest, on speciic dates, to the holder of bond
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Bonds
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Face abount of the bond
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par value
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stated interest rate paid by the issuer of the bond
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coupon interest rate
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Yrs until bond must be repaid
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maturity date
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rate of return earned on a bond held until maturity?
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yield to maturity
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2 types of bonds
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government and corporate
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how are securities issued?
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primary market- Initial public offerings, and secondary- trading
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NYSE,4
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largest in the world established in 1817 with more than 3000 companies, 13 trillion
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Amex is commonly called?
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the curb
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DJIA, S&P500 and NASDAQ composite=
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market performance measures
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Prolonged declining market. Prolonged rising
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bear and bull
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Interest rates go up, stocks, and bonds
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stocks go up bonds go down.
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bull market stocks go bonds go
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up down
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main contributors to NASDAQ
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technology
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3 keys to managing your investments
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allocate your assets, diversified portfolio, and track your investments
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What is asset allocation?
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deciding how to distribut investments among asset classes, cash ,stock bonds real estate.
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3 main factors that afftect asset allocation?
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investment objectives, investment horizon, chemistry
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3 kinds of mutual funds listed in increasing risk
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money market, bond, and stock
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Difference between balanced fund and asset allocation fund?
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balanced is a fixed % between stocks and bonds, asset= more flexible %
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Value funds?
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buy on stock that is lower then it should be
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NAV=
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Value of assets-Liabs over number of shares
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12b-1 fees cover?
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marketing
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Passively managed and taded on listed exchanges, no harvard MBA on computer=
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Exchange traded funds
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Value of large cap co= , mid=, small=
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>9bill, 1.6-9 bill, and <1.6
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Market value =
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number of shares X price
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These companies typically have relatively low growth rates, high dividend yields.
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value
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typically have realatively high growth rates, low dividend yields
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growth
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