Unit IV Personal Finance Set I

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Vocab for Unit IV Personal Finance Part I

15 Terms

1

Savings

Income not used for consumption.

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2

Investment

The use of income today in a way that allows for future benefit.

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3

Financial asset

Claim on the property of the borrower (savings accounts, houses, investment accounts).

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4

Financial intermediary

A financial institution that collects funds from savers and then invests these funds in loans and other financial assets. Brings savers and investors together.

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5

Mutual fund

A pool of money managed by an investment company that gathers money from individual investors and purchases a range of financial assets.

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6

Capital market

the market for buying and selling long-term financial assets (longer than a year).

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7

Money market

The market for buying and selling short-term financial assets (shorter than a year).

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8

High risk

High return

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9

Diversification

The practice of distributing investments among different financial assets to maximize return and limit risk.

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10

Initial Public Offering (IPO)

The original stock sale that raises money for the corporation (when a corporation goes public).

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11

Capital gain

Selling the stock at a price greater than the purchase price.

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12

Dividend payment

A share of the corporation's profits that are paid back to the corporation's stockholders.

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13

Common stock

A share of ownership in a corporation, giving holders voting rights and a share of the profits.

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14

Preferred stock

Share of ownership in a corporation giving holder a share of profits (paid before common stockholders) but no voting rights.

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15

Stockbroker

an agent who is paid a commission for buying and selling securities on behalf of customers.

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