Investing Fundamentals
This is the practice of investing a fixed dollar amount on a regular schedule, regardless of share price
What is dollar-cost averaging
Debt instruments issued by governments or corporations that pay regular interest (coupons) and repay principal at maturity.
What are Bonds
Units of ownership in a corporation that can be bought or sold on an exchange.
What are Shares?
A type of passively managed fund that aims to mirror the performance of a specific market benchmark (e.g., the S&P 500).
What is an Index Fund?
A tax system that takes a larger percentage of income from lower-income groups than from higher-income groups.
What is a Regressive tax?
A strategy of mixing various investments in a portfolio- like stocks, bonds and real estate- to reduce risk.
What is Diversification?
A bond sold at a deep discount that pays no interest, but is redeemed at its full value on the maturity date.
What are Zero-coupon bonds?
A portion of a company’s profits returned to shareholders, often expressed as a percentage of the share price.
What is Dividend?
An investment vehicle pooling money from multiple investors into a professionally managed portfolio of stocks or bonds.
What is a Mutual Fund?
A tax system in which the rate increases as the taxable amount increases.
What is a progressive tax?
A group of stocks and other securities that represent a segment of the market (like the S&P 500)
What is Market Index?
The stated annual interest rate a bond pays, calculated as a percentage of its par value.
A ratio showing how expensive a stock is relative to its earnings per share, often used to gauge valuation.
What is the Price/Earnings (P/E) ratio?
A comparison between an employer-sponsored retirement account and a personal retirement account anyone can open.
What is 401k vs IRA?
A tax system applying the same rate to every taxpayer, regardless of income.
What is a flat tax(proportional tax)?
A set of all your investments- stocks, bonds, cash and more- held by an individual or institution.
What is a Portfolio?
The principal amount (usually $1,000) that is returned to a bondholder at maturity.
What is Par value(face value)?
A company with a market capitalization value above $10 billion.
What is a Large-cap company?
A pension-like plan guaranteeing a set payout at retirement, usually based on salary and years of service.
What is a Defined benefit retirement program
An IRS form for reporting business income and expenses filed by sole proprietors or single-member LLCs.
What is Schedule C(Form 1040)
What is Volatility?
Measures of a bond issuer’s creditworthiness (e.g., AAA), which also influence the yield offered to investors.
What are Bond Ratings?
One type of shareholder has voting rights but gets dividends last; the other has no votes yet gets dividends first.
What are common vs preferred stockholders?
A retirement plan where future benefits depend on the amounts contributed and the performance of the underlying investments.
What is a Defined contribution retirement program?
An IRS form required if you have over $1,500 in interest income or ordinary dividends during the tax year.
What is Schedule B(Form 1040)?