Personal finance Ch 8

equity capital the money that the business gets from its owns in order to operate
emergency fund money that you can access quickly for an immediate need
speculative investment a high risk investment made in the hope of earning a relatively large profit in a short time
retained earnings profits that are reinvested
investment liquidity the ability to buy or sell an investment quickly without substantially affecting it’s value
dividends distributions of money, stock, or other property that a corporation sometimes pays to stockholders
common stock stock that provides the most basic form of corporate ownership, entitles you to voting privleges
preferred stock stock that gives the owner the advantage of receiving cash dividends before common stockholders receive any
corporate bond a corporation’s written pledge to repay a specified amount of money with interest
government bond written pledge of a government or a municipality to repay a specified sum of money with interest
mutual fund an investment alternative in which investors pool their money to buy stocks, bonds, snd other securities based on the selections of professional managers who work for an investment company
diversification the process of spreading your assets among several different types of investments to lessen risk
financial planner a specialist who is trained to offer specific financial help and advice
tax-exempt income income that is not taxed
tax-deferred income income that will be taxed on a later date
capital gain the profit from the sale of an asset such as stocks, bonds, or real estate
capital loss the sale of an investment for less than its purchase price
prospectus a document that discloses information about a company’s earnings, assets and liabilites, its products or services, and the qualifications of its management

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