Unit 2 Review: Investing and Personal Finance

A set of vocabulary flashcards covering personal finance and investing topics, including stocks, bonds, retirement accounts, and personal money management.

Stocks

A financial instrument that shows fractional ownership in a corporation.

Share

A piece of ownership in company stock that represents a small part of the company.

Stock Markets

Marketplaces where stocks are traded, with examples including the NYSE, NASDAQ, and OTC Markets.

Dividends

Payments that companies give to their shareholders.

Risk and Reward (Stocks)

The relationship where stocks carry more risk compared to other investments, but can also yield higher rewards.

New York Stock Exchange (NYSE)

A large marketplace where stocks are bought and sold.

Dow Jones Industrial Average

An index that tracks 30 major U.S. companies.

Stock Exchange vs. Stock Index

A stock exchange is where stocks are actively traded, while a stock index tracks the performance of stocks.

Bonds

Loans that investors give to companies or governments.

Treasury Bills, Notes, and Bonds

Government securities categorized by maturity: Treasury bills (T-bills) are short-term, Treasury notes (TN) are medium-term, and Treasury bonds (T-bonds) are long-term.

Coupon Payment

The interest paid to someone who owns a bond.

Diversification

Spreading your money across different investments to lower risk.

Mutual Funds

Investments that combine money from many people to buy different assets.

Traditional IRA vs. Roth IRA

A Traditional IRA is taxed when money is withdrawn, whereas a Roth IRA is taxed before money is contributed.

Capital Gain

The profit made when selling an investment for more than what was paid for it.

Yield

The amount of income an investment earns compared to its price.

Portfolio

A collection of your investments.

Liquidity

How easily something can be turned into cash, with cash being the most liquid of all investments.

Annuity

An investment that provides regular payments, with main types including fixed, variable, and indexed.

Pre-tax

Money that is invested before taxes are taken out.

Retirement Account Rollover

The process of transferring retirement accounts into a new employer's plan or an IRA when changing jobs.

Budget

A financial plan that should be done every month.

Interest

Extra money paid or earned on money.

High School Emergency Fund

A fund that Dave Ramsey recommends should contain $\$500$ for a high school student.

Money Personalities

The four categories of financial behaviors: spender, saver, investor, and avoider.

Appreciation and Depreciation

Appreciation is gaining value, while depreciation is losing value.

Assets and Liabilities

Assets are things you own, while liabilities are debts you owe.

Home Buying (Advantages and Disadvantages)

Advantages include ownership and building value; disadvantages include being expensive and requiring maintenance.

FDIC

An entity that protects people's money in insured bank accounts.

Gross vs. Net

Gross is the total amount before deductions, while net is the amount remaining after deductions.