Maturity
The time at which the bondholder is repaid, with interest, for money he or she lent to the bond issuer.
Coupon Bond
A bond that pays out interest at fixed intervals over the time the bond is held by the investor.
Short-term Bonds
These bonds mature in 1-5 years
Bond rating
in order to help bond buyers evaluate the risk associated with a particular bond, companies such as Moody's research the company or agency issuing the bond and give it a grade between C and Aaa.
Treasury Bonds
These bonds, issued by the U.S. Treasury, usually offer low rates. They are low-risk investments because they are backed by the full faith and credit of the U.S. government.
Face Value
The price an investor pays for a bond. Also called par value
Zero-coupon Bond
A bond whose purchase price is below the face value. One final payment that includes the principal plus interest is made at maturity
Debt
Money owed to someone else. It is also the state of condition of owing money.
Junk Bonds
These instruments are high- yield bonds. The potential return is high because the risk is high.These bonds have poor credit ratings.
Coupon
The interest on a bond.
Aaa
Bond issuers are assigned a credit rating by companies such as Moody's. The lowest ratings is C. This is the highest rating.
Long-term Bond
These bonds mature in more than 10 years.
Earning per share
A measure calculated by dividing a company's profits by the number of shares. When this measure is rising, it suggests that a company is well managed.
Portfolio
An investor's collection of assets. Investors try to reduce risk by diversifying the assets in their collection of holdings.
Bankruptcy
A legal determination sometimes sought by people or corporations unable to pay their debt. In these proceedings, courts settle outstanding debts with creditors
Market Order
A customer order for immediate execution (of a stock purchase of sale) at the best price available when the order reaches the marketplace.
Buying on Margin
Investors who own stock can often buy more stock even if they don't have more cash. They can borrow against the stock they already own.
Discount Brokers
Brokerage firms that offer fewer services and charge lower fees.
Credit
The ability of a customer to obtain goods or services before payment, based on an agreement to pay later.
Yield
One measure of a stock's performance. It is the relationship between the dividend and the closing price of the day.
Diversification
Owning different types of securities in different companies in unrelated industries. Investors follow this practice in order to reduce risk.
Limit Order
A customer order to execute a transaction (for purchase or sale of a stock) only at a specified price (the limit) of better.
Full- service Broker
This type of broker offers more services and charges higher fees.
Closing Price
The last price at which a security traded during a trading session; the price reported in financial media.
Mutual Fund
A pool of money used by a company to purchase a variety of stocks, bonds or money market instruments. It provides diversification and professional management of investors.
Price/Earnings Ratio
Often referred to as P/E, it is the price of one share of stock divided by the company over the past four quarters.
Net Asset Value
A measure of the market value of a share in a mutual fund.Usually, it is calculated by taking the value of all securities minus liabilities and then dividing the result by the total numbers of shares.
Stock Split
Companies- sometimes decide to give each shareholder two or three shares for each share they currently hold. 26
Stock Symbol
A one-, two-, three- or four-letter description that stands for the name of a company traded on a stock exchange
Capital Gain
What the buyer obtains when he or she is able to sell a share of stock for more than he or she paid for it
Rule Of 72
A mathematical rule for determining the number of years it will take for a investment to double its value.
Trading Volume
The numbers of shares of a stock traded on a trading day
Bond
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Market Economy
This type of economy has certain features such as private ownership of property, self-interest, competition, the profit motive, voluntary exchange and a limited role for government
Common Stock
A person who owns this owns a share of a company. The owner is entitled to a share of any dividends distributed and to vote in the election of directors.
Sell Short
An investor who believes that a stock price is going to fall many ask a broker to led the investor stocks which are then sold at the current price. Later, if the stock price falls, the investor can buy the stock back, return it to the broker and make a pr
Compound Interest
A payment based on the principle and on interest earned previously. It is paid on interest.
Savings Account
An interest bearing account at financial institution. An insured low -risk form of saving.
IPO
A company's first sale of stock to the public. When a company "goes public," it sells blocks of stock shares to an investment firm that specializes in initial offerings of stocks and resells them to the public
Round Lot
The purchase of stocks in multiples of 100.
Credit Card
A small, specially coded plastic card issued by a bank, business or another financial institution to enable consumers to purchase goods or services on credit
Dividend
The share of profits paid to shareholders
Three Rules Of Building Wealth
1)Start early to gain the advantages of compounding. 2)Buy and hold for the long term. 3)Diversify to spread risk over several forms of investment
Fundamental Analysis
This form of stock analysis examines changes in sales, earnings, and demand for goods and services produced.
Price
The amount people pay when buying a good, service or a stock
U.S. Savings Bonds
Securities issued by the United States in relatively small denominations for individual investors.These securities represent loans to the U.S. government.They are low-risk investments
FDIC
A federal agency that provides insurance on bank accounts
Economic Investment
The purchase of capital good such as machinery to increase production of goods and services.
Bear Market
An extended period of price declines in an individual security or in the securities market as a whole.
Index funds
A type of mutual fund that keeps a portfolio of securities designed to match the performance of the market as a whole as represented by a market index such as the S and p 500.
Save
to set money aside for future use. To divert money from current spending to a savings account or another form of investment.
Scarcity
This is the condition that exists because human wants exceed the capacity of available resources to satisfy those wants.
Human Capital
the knowledge skills values and health of workers
Long term Saving goal
A goal that will require five years of saving or more.
Corporation
A business that has been granted a state charter, recognizing it as a separate legal entity having its own right and liabilities, distinct from those of the individuals within it.
Risk return Relationship
The trade off made by investors as they decide how to use their savings. Some investors favor safer investments such as savings accounts while others favor riskier investments such as stocks.
Money market fund
A fund restricted by law to investing in the short term money market. It is a mutual fund that sells shares of ownership and uses proceeds to buy short term high qualiy securities.
Principal
The original amount of money invested deposited or borrowed.
Specialists
These individuals work on the floor of a stock exchange. They make a market in a particular stock. The location where they work is called a post.
Brokerage Fee
When stocks are bought or sold this is the payment that goes to the firms that handle the transactions.
Load
The sales fee a buyer pays to acquire an asset. Many mutual funds charge these fees. As a result of this fee only a portion of the investor's funds go into the investment itself.
Capitalization
This statistic is calculated by multiplying a company's outstanding stock shares by the price.
Dow Jones Industrial Average
An indicator of how the shares of the largest U>S> companies are doing. It includes 30 of the most actively traded blue-chip stocks, most of which are industrial.
American Stock Exchange
Stocks are sold in this market. Brokers and specialist make transactions on the floor. This market is similar to the New York Stock Exchange, but generally lists smaller companies.
Bulls
Investors who buy stocks because they believe that the stock market is going up are called by this name. Investors with the opposite views are called bears.
Primary Market
The market where new securities are offered for sale for the first time. When companies need funds to expand, they can sell stock or bonds in this market.
New York Stock Exchange
Stocks are sold in this market on Wall Street in New York City. Brokers and specialists make transactions on the floor in a live auction market. This is the oldest stock exchange in the United States.
Liquidity
The ease with which an asset may be converted to cash. This is an important criterion for some investors, especially those who might need cash right away.
Secondary Market
A market in which stocks can be bought and sold once they are approved for public sale. The New York Stock Exchange is an example. Here stocks are exchanged among buyers and sellers without the involvement of the issuing company.
Wall Street
A very famous street in New York, thought of worldwide as the center of financial activity in the United States.
Certificate of Deposit(CD)
A certificate issued by a bank to a person depositing money in an account for a specified period of time, such as six months or one year. A penalty is charged for early withdrawal.
NASDAQ
An electronic marketplace enabling buyers and sellers to get together via computer and hundreds of thousands of miles of high-speed data lines to trade stocks