FBLA

What is an investment?

An asset or good acquired to generate income or appreciate in value over time.

What are the three major asset classes?

Stocks, Bonds, and Cash.

What does market capitalization refer to?

Total market value of a company’s outstanding shares.

What happens to stock prices when a company’s value rises?

Stock prices increase.

What are dividends?

A portion of a company’s yearly profit paid to shareholders.

What is a bond?

A loan to a company/government with fixed interest payments.

How do interest rates affect bond values?

When interest rates increase, bond values decrease (and vice versa).

What is a cash investment?

Not risky but loses value due to inflation.

What are some examples of other asset classes?

Real estate, commodities, currencies, futures, and options.

What is saving?

Setting aside money for emergencies or short-term goals.

What are the benefits of saving?

Liquidity, security, ideal for short-term planning.

What risks are associated with saving?

Low returns, inflation risk.

What are bank/credit union savings accounts characterized by?

Low interest, high liquidity.

What is a checking account?

Allows frequent transactions via checks or debit cards.

What is the definition of a Money Market Account (MMA)?

An interest-bearing account with some check-writing privileges.

What is a Certificate of Deposit (CD)?

Fixed-term savings with a higher interest rate.

What is the average U.S. personal savings rate?

3.2%.

What is a pension plan?

An employee benefit providing retirement income.

What is the difference between a secured loan and an unsecured loan?

Secured loans are backed by collateral; unsecured loans have no collateral and typically higher interest.

What is a revolving loan?

A loan that can be borrowed, repaid, and borrowed again (e.g., credit cards).

What are the payment components of a mortgage?

Principal, Interest, Taxes, and Insurance (PITI).