Post on 27-Dec-2015
4.03 Bluff
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What’s the difference between saving and investing?
Saving=putting money aside
Investing=putting money to use in order to make more money
What’s the formula to calculate interest?
I=PRT
What are the 3 savings plans?
Savings account, CD, money market account
This type of savings plan requires a minimum deposit and interest is
earned based on government and corporate securities. Usually withdrawals are allowed without
penalties.Money market account
This type of savings plan requires a minimum deposit, money to
remain deposited for a period of time without penalties. Penalties
may be assessed if money is withdrawn before specified time
Certificate of deposit
Name 3 investing options.
StocksBonds
Mutual Funds and Exchange-traded FundsReal Estate
CommoditiesCollectibles
What’s the difference between common stock and preferred
stock?Preferred stock pays dividends before common stock is paid.
Preferred stockholders do not have voting powers; but common stockholders are invited to annual corporate meetings and permitted to one vote per share of stock
owned.Preferred stock is less risky than common stock.
What are dividends?
Part of the profit shared with the stockholders
How are stockbrokers paid?
Commission
What is the largest stock exchange in the US?
NYSE
Name 2 economic factors that could influence investors in
selecting stock.Inflation
Interest ratesConsumer spending
Employment
This ratio is the relationship between a stock’s selling price
and it’s yield.Price per earnings ratio
What’s the formula to calculate yield?
current value – original value
Original value
A promissory note to pay back a specified amount of money at a stated rate on a specific date.
Bond
These bonds are issued by local and state governments for public
service projects
Municipal bonds
An example of these bonds are the EE bond interest is paid once the bond is cashed. The HH bond
interest is paid twice a year, which may be considered
income.US Savings Bonds
What’s the time frame for treasury bills?
91 days to a year
What’s the time frame for treasury notes?
1-10 years
What are corporate bonds used to finance?
Expansion, new products, debt repayment, etc
This type of mutual fund looks for quick growth, but also have an
higher risk than other stock.
Aggressive-growth stock funds
This type of mutual fund concentrates on stocks that pay
regular dividends. Income funds
This type of mutual fund invest in a variety of company stock
around the world.
International funds
This type of mutual fund purchase stocks of companies in
the same industry.Sector funds
This type of mutual fund concentrate in corporate bonds.
Bond funds
This type of mutual fund invest in both stocks and bonds.
Balanced funds
What does ETF stand for?
Exchange-traded fund
Name one advantage of owning real estate.
tax benefits, increased equity, and pride of ownership
Name one disadvantage of owning real estate.
property taxes, interest payments, property insurance, and
maintenance
What are commodities and futures?
grain, livestock, and precious metals. Commodity investors usually agree to buy and sell for an amount at a specified price in the future. Examples may include rice,
cattle, and gold.
Name one example of a collectible.
art work, antique furniture, and autographed items.
What are 2 of the 4 evaluation factors for investment options?
Safety and risk: how likely are you to lose your money?Potential yield: how much profit are you likely to make on this
investment?Liquidity: how fast can you turn this investment into cash?
Taxes: how much will you have to pay in taxes for this investment?