Business Principals Chapter 7 (2)

Stock

A share of ownership in a company.

Purchasing Equity

Buying stock means you own part of a company.

Dividends

Money paid to shareholders from a company's earnings.

Appreciation

When a stock's value increases over time.

Common Shares

Stock that usually gives you voting rights.

Preferred Shares

Stock that usually provides fixed dividends and gets paid first if the company closes.

Price Fluctuation

Stock prices go up and down based on supply and demand.

Full-Service Brokerage

A broker that provides personal advice but charges higher fees.

Discount Brokerage

A broker with lower fees but less personal advice.

Mutual Fund

A pool of money from investors used to buy stocks, bonds, or other investments.

Investment Strategy

A plan a fund uses to try to earn money.

Benefits of Mutual Funds

They provide diversification and professional management.

Index Fund

tracks a specific market index.

S&P 500

Tracks 500 large U.S. companies.

Dow Jones Industrial Average

Tracks 30 major U.S. companies.

Total Stock Market Index

Invests in almost the entire U.S. stock market.

Sector Fund

Invests in one specific industry, such as technology or healthcare.

Regional Fund

Invests in companies from a specific geographic area.

Global/International Fund

Invests in companies around the world.

Socially Responsible Fund

Invests in companies that meet environmental or ethical standards.

B Corp

A for-profit company that meets high social and environmental standards.

Non-Profit Organization

An organization that uses money to support a cause instead of making profits.

Target Retirement Fund

A fund that changes investments as retirement gets closer.

Bond

A loan to a government or company that pays you interest.

Bond Fund

A fund that invests in many bonds.

EE Bond

A U.S. government savings bond that earns interest over time.

Corporate Bond

A loan to a company that pays interest.

Municipal Bond

A bond issued by a state or local government.

War Bond

A government bond used to help fund war efforts.

Roth IRA

A retirement account funded with after-tax money that can grow tax-free.

CD (Certificate of Deposit)

A savings investment that earns fixed interest for a set period of time.

Diversification

Spreading your money across different investments to reduce risk.

Timing

Choosing when to buy or sell investments based on your situation and the market.

Very Aggressive Portfolio

High risk and high potential reward, usually better for younger investors.

Moderately Aggressive Portfolio

A mix of stocks and safer investments.

Conservative Portfolio

Lower risk, with more bonds and safer investments.

Fixed Income Securities

Investments that provide regular or predictable payments, such as bonds and CDs.

Fixed Income Securities examples:

CDs, bonds, and annuities.

Stocks in Retirement

Retirees may still own stocks so their money can grow and keep up with inflation.