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66 Cards in this Set
- Front
- Back
Should you wait to invest in a 401k? Why or why not? |
You shouldn't wait because your employer might offer a match to your 401k. Which means free money for you. |
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Define: Mortgage Bond |
A bond that is guaranteed and secured by assets of the issuing firm |
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What is the most stable form of investment? |
Bonds |
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Risk assumption of an investment... |
is directly related to the amount of return. The higher the risk, the higher the return. |
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Name the 3 treasury (government) securities |
Bills: Short term, less than 1 year due Notes: Medium term, 1-5 years due Bonds: Long term, up to 30 years due |
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General Obligation Bond |
A bond that is voted upon by taxpayers |
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Revenue Bond |
Paid by use of proceeds from the project it financed |
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Serial Bond |
Bonds of a single issue that mature on different dates |
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Which investment has the least liquidity? |
Real Estate |
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Junk Bond(Speculative Grade) |
A high-yield, high-risk security, bond. Issued by a company seeking to raise capital quickly |
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What is a discount? |
When a bond sells for less than its face value |
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What is a premium? |
When a bond sells for more than its face value |
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What is the face value of a bond? |
$1,000 |
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Bond Indenture |
All the details of the bond on one paper. It says the interest rate, due date, bond type etc. |
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Debenture |
A bond backed by a company |
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Call Feature on a bond |
When the bond issuer recalls the bond in order to change the interest rates |
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Sinking Fund |
The money a company puts aside each year in order to pay off bonds |
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Government bond |
The written pledge of a government or a municipality to repay a specified sum of money, along with interest. |
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Registered Bond |
A bond in specific ownership to you. The company knows your name and address etc. and will only pay to you |
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Bearer Bond |
A bond that is owned by the person who holds it. |
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Term Life Insurance |
Increases in premiums when the term is renewed, if it is not renewed, you lose your insurance. |
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Whole Life Insurance |
Insures a person for their whole life, has a cash value. Premium insurance decreases with age |
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Universal Life Insurance |
Has a term, and also has cash value. |
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Ways to make money on a bond |
Getting paid interest, selling the bond, owning the bond |
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Double indemnity is also known as? |
Accidental Death |
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Adjustable Life insurance |
Is designed to let you pay premiums at any time with any amount of money. |
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Variable Life Insurance |
Cash value of life insurance policy is variable because it is invested in the stock market |
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Annuity |
A specific amount of money paid over a specific amount of time |
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What is a rider? |
The change to insurance policy that doesn't change the entire policy |
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Non-Forfeiture Clause |
Provision that prevents the life insurance company from taking your cash value |
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Participating Policy |
Pays you extra if the people you have insured have not died or been injured in the past year |
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Proxy |
You give up your rights to vote to someone else, who will then vote for you |
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Are dividend payments on a common stock guaranteed? |
No. Common stock is not paid in dividends |
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Preferred Stock Dividends |
Are accumulative. They get paid before common stock does |
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Stock split |
When the amount of stocks you have are divided up, so they are worth less, but you have more of them |
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Bull Market |
A market In which share prices are rising, encouraging buying |
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Bear Market |
A market in which prices are falling, encouraging selling |
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Selling Short |
Borrowing money for the stock, selling it, then paying back the money at a later date. |
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Date of Record |
The day that dividends are available to those that are owed them |
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Which investment has the greatest growth potential? |
Common Stock |
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What is a foreign corporation? |
A business that operates in a state that its charter is not held in |
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What is a limit order? |
When a person requests their stock to be bought or sold at a specific price |
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What is a market order? |
When a person requests their stock to be bought or sold at that exact moment, regardless of price. |
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What is a stock option? |
A benefit in the form of an option given by a company to an employee to buy stock in the company at a discount or at a stated fixed price.
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What is churning? |
Excessive trading by a broker in a client's account largely to generate commissions. Churning is an illegal.
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Buying on margin |
You borrow money to buy the stock |
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IPO stands for? |
Initial Public Offering |
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Dollar cost averaging |
When someone buys stock regularly. When one stock is doing bad, they buy more of another stock to even out their losses. Its a psychological thing. |
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NASDAQ |
National Association of Security Dealers Automated Quotations
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Common Stock |
Gets a share in the company's profits, has voting rights, is more risky, has a higher payout, no dividends, can be diluted |
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Preferred Stock |
Doesn't benefit from profit of company, has no voting rights, is less risky, has a lower payout than common stock, cannot be diluted, has dividends |
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What are the 5 stock sizes? |
Large cap, Mid cap, Small cap, Micro Cap, Penny cap(under $1) |
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What is yield, and how do you calculate yield? |
The rate of return earned by an investor who holds a bond for a stated period of time. Take the amount of dividends for the year and divide them by the price per share of the stock. |
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Beta Score/Index |
Relative risk of a particular stock in relation to all other stocks in the market. Smaller than one = less risky/volatile. Higher than one = more risky.
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Non-participating Insurance Policy |
Life insurance that does not provide policy dividends. Also called non par policy. |
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Blue Chip Stock |
A safe investment that generally attracts conservative investors. |
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What is a beneficiary? |
A person designated to receive something, such as life insurance proceeds from the insured. |
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What is a interest adjusted index? |
A method of evaluating the cost of life insurance by taking into account the time value of money. Used in comparing policy costs |
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What is asset allocation? |
The process of spreading your assets among several different types of investments to lessen risk. |
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Municipal Bond |
A debt security issued by a state or local government. |
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Corporate Bond |
A corporations written pledge to repay a specified amount of money with interest. |
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What is a convertible bond? |
A bond that can be exchanged, at the owners option, for a specified number of shares of the corporation's common stock. |
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What is equity financing? |
Money received from the owners or from the sale of shares of ownership in a business |
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What is earnings per share and how do you calculate it? |
A corporations earnings divided by the number of outstanding shares of a firm's common stock. |
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Price Earnings Ratio |
The price of a share of stocks divided by the corporations earning per share of the stock. |
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Secondary Market |
A market for existing financial securities that are currently traded among investors. |