Chapter 31: Investing

Liquidity

Liquidity

________ refers to how easily an investment can be turned into cash.

Security

A(n) ________ is a tradable document that shows evidence of debt or ownership.

Municipal bonds

________ are sold to finance city, town, or regional projects such as schools, highways, and airports.

yield

The return on an investment is the amount of money the investment earns, or the ________.

Treasury bills

________ are sold in units of $ 1, 000.

SEC

Companies that sell stock must follow rules set up by the Securities and Exchange Commission, or ________.

construction

They are usually used to finance ________ and equipment.

NASDAQ

The ________ is an electronic stock market system that quotes over- the- counter securities.

Stockbroker

A(n) ________ is a person who buys and sells stocks, bonds, and other securities for clients.

EE

A Series ________ savings certificate costs half the amount of its face value to buy.

possibility of profit

Investing is using money to participate in an enterprise that offers the ________.

Bonds

________ may be sold at a discount, or below their face value.

Capital loss

A(n) ________ is an amount lost when an asset is sold for less than its cost.

T bills

________ are discounted securities, which means the purchase price that investors pay is less than the face value of the ________.

Dividends

________ are usually paid quarterly in cash or in more shares of stock.

Capital gain

A(n) ________ is a profit made from the sale of a financial asset such as stock or a bond.

interest rates

Generally, the ________ on notes and bonds are higher than on T- bills because of the increased risk of the rates rising or falling during the length of time until the note or bond matures.

Mutual funds

________ lessen the risk of investing in the stock market.

Face value

________ is the value of a security that is set by the company or government that is issuing it.

Maturity date

A bond is a certificate issued by a government or company in which it promises to pay back borrowed money at a fixed rate of interest on a specified date (the ________)

Stock

A(n) ________ is a share of ownership in a corporation.

US Treasury Department

The ________ issues four basic types of securities: Treasury bills (or T- bills), notes, bonds, and savings bonds.

Corporate bonds

________ can be bought and sold through brokerage firms.

SEC

The ________ is a U.S. government agency that supervises the exchange of securities to protect investors from wrongdoing.

Stockbrokers

________ act as a link between buyers and sellers.

mutual fund

A(n) ________ is a fund created by an investment firm that raises money from many shareholders and invests it in a variety of stocks or other investments.

There are two types of bonds you can buy

government bonds and corporate bonds

The U.S. Treasury Department issues four basic types of securities

Treasury bills (or T-bills), notes, bonds, and savings bonds

However, a big advantage of stocks is that long

term comparisons of returns on stocks and returns from savings accounts or bonds show stocks do better over time