(REQUIRED) Ch. 14-15 Annuities & Sinking Funds / Building Wealth Through Investments

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17 Terms

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ANNUITY

A contract between a person (the annuitant) and an insurance company (the insurer) for receiving and disbursing money for the annuitant or the beneficiary of the annuitant

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CONTINGENT ANNUITY

An annuity paid over an uncertain number of periods

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ANNUITY CERTAIN

An annuity being paid over a guaranteed number of periods

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ROTH IRA

An IRA where contributions are NOT tax-deductible, but qualified distributions are tax free when withdrawn

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SINKING FUND

A payment into an ordinary annuity to yield a desired future value

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DIVIDEND

A portion of the profit of a company that is periodically distributed to the stockholders of a company

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PREFERRED STOCK

A type of nonvoting stock that provides for a specific dividend that is paid before any dividends are paid to common stockholders and which takes precedence over common stock in the event of a company liquidation

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STOCK BROKER

The person who handles the trading of stock.

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COMMON STOCK

A type of stock that gives the stockholder voting rights. After dividends are paid to preferred stockholders, the remaining dividends are distributed among the common stockholders

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CURRENT YIELD

The ratio of the annual dividend per share of stock to the closing price per share

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DIVIDENDS IN ARREARS

Dividends that were not paid in a previous year and must be paid to cumulative preferred stockholders before dividends can be distributed to other stockholders

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BOND

A type of loan to the issuer to raise money for a company, state, or municipality. The investor or bondholder will be paid a specified rate of interest each year and will be paid the entire value of the bond at maturity.

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FACE VALUE (PAR VALUE)

The original value of a bond, usually $1,000

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TREASURY BONDS

Bonds issued by the federal government

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PREMIUM BOND

A bond that sells for more than the face value

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DISCOUNT BOND

A bond that sells for less than the face value

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PORTFOLIO

A collection of different types of investments, normally owned by an individual