Stock Basics
This type of investment represents ownership in a company
Stocks
This is the place where stocks are bought and sold.
The Stock Market or Stock Exchange
This type of investment is essentially a loan made to a company or government.
Bond
One major risk of stocks is that prices can do this.
They can go down
You bought a stock for $50 and sold it for $60. How much profit did you make?
$10
This payment is sometimes given to shareholders when a company earns profits.
Dividends
This professional buys and sells stocks on behalf of investors.
Broker
This is the original amount invested in a bond.
Principal
This term describes the risk that a borrower may not repay a bond.
Default Risk
You bought a stock for $100 and sold it for $120. What is your return as a percentage?
20%
Investors buy stocks mainly for this reason
To grow their investment (or earn returns)
This term refers to a collection of investments owned by one person.
Portfolio
This term refers to money earned for lending money through a bond.
Interest
Stocks usually have higher potential returns, but also this.
Higher Risk
You buy a $1,000 bond with a 5% annual coupon rate. How much interest will you earn in one year?
$50
This term describes the profit made when you sell a stock for more than you paid
Capital Gain
These two major U.S. stock exchanges are where many stocks trade.
NYSE and NASDAQ?
This is the interest rate that a bond pays each year.
Coupon Rate
A type of bond issued by state and local governements that help pay for projects like roads, schools, parks, and bridges.
Municipal Bond
You buy a $2,000 bond with a 6% annual coupon rate, paid semi-annually. How much interest will you receive each payment and total for the year?
$60 per payment, $120 per year
If you sell a stock for less than you paid, this is called this type of loss.
Capital Loss
This event happens when a company sells its stock to the public for the first time.
Initial Public Offering (IPO)?
This is the date when the bond issuer repays the principal to the investor.
What is the maturity date?
These types of bonds are issued by companies to help raise money to expand their business, launch new products and build new facilities
Coprorate Bond
You buy a $1,000 bond with a 5% annual coupon rate and an 8-year term. How much total interest will you earn over the life of the bond?
$400