Investments
Mutual fund index
best way to have diversification
grows your money a lot, less affected by risk…like statistics
Rebalancing
Characteristics of Common Stocks
cyclical vs. noncyclical
peaks and troughs
noncyclical are the one that do not have peaks and trought typically e.g. beer and liquor companies
Beta
measurement of hw volatile a stock is
income stock
pay out dividends regularly
beta of 1
growth stock
dont pay out dividends but grow
1.5 Beta or more
blue chip stocks
make more than a billy a year
beta is about 1
value stocks
beta of 1-2
typically go up
large, mid, and small cap
large is 10 billy or more
mid is
small is 2 billy or less
Tech stocks
in the STEM and innovative sectors
speculative stocks
fundamental analysis
bonds
maturity date
when you get the same amount of return that you originally gave the government or company
investment grade bond
lower risk of default and receive higher ratings
seen as the best to get
default bonds
coupon bonds
face value on it
with a guaranteed % on it
callable
when a bond is callable they pay the maturity amount early to avoid paying the interest on it
treasuries
par amount
above par is called premium
below is called discount market
bids on it at an auction
has an interest or discount margin
can be competitive or noncompetitive
broker or dealer give it to you
look at tables in bonds ch.14 for the test in april
Mutual Funds
god way for the avg person to invest in the stock market
help combat inflation
example companies:
vanguard
T-Roy Price
Fidelity
NVA
how to make profit
capital gains can be put back into the fund to make more money
or you can just sell dividends
Exchange Traded Funds
have an exchange market, not the same as the stock market
don’t have to wait until 5 pm like with mutual funds
passively managed
indexed
can mean unmanaged or only with a certain sectors
some MFs and ETFS
tax-exempt due to non profits
just invest in bonds
regional fund
owns stocksin a certain region of the country