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36 Cards in this Set

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What does a company issue stock?
It is a way for them to raise funds for every day business practices.
What is the relationship between risk and rate of return?
The higher the risk the higher the return
The lower the risk the lower the return.
What are the two basick types of stock?
Common and Preferred Stock
What is the definition of a stock?
A share of ownership in the assets and earnings of a company.
What are dividends?
Profits you receive from a compnay as a shareholder.
Why do people invest?
For long term goals and for increasing future wealth.
How do you find rate of return?
Profit divided by total investment.
What is inflation?
The general rise in prices of goods and services.
What are the 3 types of investors?
conservative, moderate, and aggressive.
What is portfolio diversification?
Spreading you risk by investing in a variety of stocks, bonds, and other investment tools.
What is portfolio diversification?
Reducing your risk by investing in a variety of stocks, bonds, and other investment tools.
What are you called if you own stock in a company?
Shareholder
How is preferred stock different from common stock?
Preferred stock gets paid dividends and common stock gets voting rights.
The largest and most prestigious exchange is...
The New York Stock Exchange (NYSE)
What is the 2nd largest exchange that is not as strict as they NYSE?
AMEX American Stock Exchange
This economic law runs the stock market?
supply and demand
When reading stock quotes, what does the High/Low represent?
the high price and the low price for the day
What is a bull market?
When investors are optimistic and the market is doing well.
What is a bear market?
When investors are pulling their money out and the market is doing poorly.
What is a stock split?
the market price is cut in half and the number of shares you own doubles.
What is a cyclical stock?
A stock that follows the ecomony, heavy upon consumer dependency.
What is a countercyclical stock?
A company that is not impacted by the economy.
What is a value stock?
A stock that is considered a good buy because it is cheaper.
What does the beta measure?
How the stock reacts to changes in the market.
What are some examples of a blue chip stock?
Wal-Mart, McDonalds,
What is a broker?
Someone who you hire to buy and sell stocks and bonds for you. They make money off of commission.
What does NASDAQ stand for?
National Association Securities Dealers Automated Quotations
Which type of stock is considered highest risk?
speculative stock
What is the Rule of 72 and it's formula?
Tells you how long it would take you to double your money. 72/interest rate.
What does the time value of money say about the value of the dollar in the future.
the dollar will be worth less because of inflation.
Which savings tools pays higher interest than a savings account, but only allows you to access your money 3 times a month?
Money Market Account
What is a certificate of deposit?
An account where you have a set interest rate for a set period of time. You have to pay a penalty when withdrawing early.
Why is it important to put money aside in a savings account?
For emergencies and for purchases.
How many months worth of pay should be put into the savings account?
3-6 months.
What is a mutual fund?
A professionally managed portfolio with stocks, bonds, and other investments.
Why is real-estate a good investment?
The value statistically always rises and property and land prices move with inflation prices.