Personal Finance- Chap. 11

Investment
the use of money to earn the best possible return with the least amount of risk.

Inflation
a rise in the general level of prices.

Investing
the use of savings to earn a financial return.

Investing Risk
the chance that an investment’s value will decrease.

Annual Report
a document that gives the financial history of a corporation.

Political Risk
government actions that affect business profits.

Financial Pages
sections of newspapers containing financial data.

Full-Service Broker
a person who buys and sells securities for clients.

Investor Services
provide financial data for interpretation. (Moody’s)

Discount Brokers
brokers who buy and sell securities for clients for a reduced commission.

CFPs
professional investment planners.

The Rule of 72
a formula used to estimate time or rate to double your money.

Diversification
the spreading of risk among many types of investments.

Stocks
represent ownership in a corporation.

Bonds
debt obligations of corporations or a government.

Mutual Fund
pools money of many investors and buys a large selection of securities.

Annuity
a contract issued by an insurance company that pays a series of regular payments, usually after retirement.

Discount Bond
bond is purchased for less than its maturity value.

Futures
contracts to buy and sell commodities for a specified price on a specified future date.

Penny Stocks
low priced stocks of small companies that have no track record.

Option
the right, but not the obligation, to buy or sell a commodity or stock for a specified price within a specified time period.

True.
A Put and Take account is an emergency fund.

False.
Public corporations are not required to publish annual reports.

True.
Market risk is caused by business declines or other events.

False.
Political risk refers to the effects of higher interest rates when you are locked into lower rates.

True.
Investments that require more risk usually provide greater potential returns.

True.
An investment in real estate is generally considered relatively safe but not liquid.

False.
Beginning investments should include only long-range goals such as planning for retirement.

False.
An investment adviser is responsible for your decisions.

market risk
What risk is associated with a business decline?

long-term
Permanent investments are generally made to provide for ____ goals.

one year or less
For how long a period of time are Treasury bills issued?

speculation
What is the final level of investing?

liquidity, growth in value, safety
What are factors to consider when selecting an investment?

stock
What is an example of a high risk/high return investment?

define your financial goals
What is the first step to wise investment practices?

systematic investment
What is an example of a savings plan where an individual invests on a regular and planned basis?

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