Emergency Fund
an amt of money you can obtain quickly in case of immediate need
Line of Credit
a short term loan that is approved before the money is actually needed
Seven steps to survive a financial crisis/make sure financial affairs are in order
Establish a larger than usual emergency fund
Know what you owe
Reduce Spending
Pay off credit cards
Apply for a line of credit at your bank, credit union, or financial institution
Notify credit card companies and lenders if you are unable tomake payments
how long can a bankruptcy or going bankrupt remain on your credit report?
Up to ten years
What are the employer sponsored retirement accounts?
401(k) or 403(b)
What does safety in an investment mean?
Minimal risk or loss
Speculative investment
high-risk investment made in the hope of earning a relatively large profit in a short amount of time
how should risk and investment be related?
The potential return on any investment should be directly related to the risk the investor assumes
inflation
rise in the general level of prices
If values of investments decrease
overall interest rates increase pg 258
Interest rate risk is associated with
preferred stocks or government/corporate bonds resulting in changes in the interest rates in the economy
how does the govt reduce interest rate risk
inflation protected bonds
most conservative investments
passbook savings, accounts, certificates of deposit, securities by u.s. govt
Liquidity
ability to buy or sell an investment quickly w/o substantially affecting the investments value
Asset allocation
process of spreading your assets amoung several different types of investments to lessen risk
government bond
written pledge of a government or a municipality to repay a specified sum of money, along with interest
municipal bond
debt security issued by a state or local government
general obligation bond
bond backed by the full faith, credit, and unlimited taxing power of the government that issued it
revenue bond
bond that is repaid from the income generated by the project it is designed to finance
Corporate bond
corporations written pledge to repay a specified amt of money with interest
maturity date
for a corporate bond, the date on which the corporation is to repay the borrowed money
bond indenture
a legal document that details all of the conditions relating to a bond issue
trustee
financially independent firm that acts as the bondholders representative
debenture
bond that is backed only by the reputation of the issuing corporation
mortgage bond
corporate bond secured by various assets of the issuing firm
convertible bond
a bond that can be exchanged, at the owner's option, for a specified numver of shares of the corporations common stock
call feature
feature that allows the corporation to call in, or buy, outstanding bonds from current bondholders before the maturity date
sinking fund
fund to which annual or semiannual deposits are made for the purpose of redeemng a bond issue
serial bonds
bonds of a single issue that mature on different dates