CE Test #3 !

Vocab:

Annual percentage yield(APR)- the actual interest rate an account pays per year.

dividends- or a share of the company’s profits

Bond- a written promise to pay a debt by a specified date.

Face value- the amount printed on a bond.

Simple interest- interest paid one time a year on the average balance.

Certificates of Deposit (CD’s)- A deposit into a savings account that earns a fixed interest rate for a specified period of time.

Simple interest- interest paid one time a year on the average balance.

Principal- The money you have on deposit in a savings account, CD, or other savings option.

Compound interest-interest paid on the principal and on previously earned interest.

Commercial bank- a financial institution that serves individuals and businesses with a wide variety of accounts, loans, and other financial services.

Credit Unions- Financial institutions owned by their depositors.
Money Market Account- a deposit for which the interest rate changes over time

Principal- the money you deposit in a savings account, CP, or other savings option

Simple interest- interest paid one time a year at the end of the year on the average balance in a savings account

Mutual fund- a business that accepts deposits from many people to invest in various ways

Load- a sales fee paid for investing in a mutual fund

Investing- If you choose to save in a way that earns income

Return- The income you earn

Diversification- Investing in various businesses(accounts) with different levels of risks

Share of stock- is a unit of ownership. You become a stockholder.

Stockholders- the investors who own the corporation because they own shares of its stock.

Transactions- the sale or purchase of shares. Usually through a stockbroker.

Stockbroker- a person who handles the transfer of stocks and bonds.

brokerage firm- a company that helps people buy and sell stock. They charge fees for their service.

stock exchange- where orders to buy or sell stock are sent and carried out.

Capital Gain- The profit you earn from selling stock at a higher price than you paid for it.

Capital loss- the amount you lose.

Common stock- a voting share that does not pay a set dividend. Dividends depend on the corporation’s profits.

Prospectus- a publication provided by the mutual fund that describes how the fund is operated, the fund’s investing objectives, and the fees that it charges.

Securities and Exchange Commission (SEC)- to prevent a stock market ‘crash’

Insider trading- trading stock based on information that is not made public.

401 (k) plan- a tax-deferred retirement plan that some employers offer their employees.

IRA- savings plan that is tax-deferred and not employer sponsored.

Roth IRA- you pay taxes on the money you put in. When you start to withdraw at retirement,

you won’t have to pay taxes. You pay NO TAXES on money earned.

Savings and loan association- Lend money for people to buy homes