Investing Vocab
What is an emergency fund?
Money set aside for unexpected expenses
What is the abbreviated name of a stock called? (Ex: Amazon's in AMZN)
Ticker symbol
What is a government bond
A debt security issued by the government to support government spending
What does ETF stand for
Exchange-Traded Fund
What is a "stock split"
The issuance of more shares of stock to a stockholder in some proportion to the amount they already own
Ex: 2 shares worth $50 each splits to 4 shares of $25
What is "diversification"
Spreading your investments across different industries and asset classifications (stocks, bonds, ETFs, commodities, crypto)
Purchasing a stock means you have purchased _____ in a company
ownership / a share
What is a corporate bond?
A debt security issued by corporations and sold to investors to raise money for any number of reasons
What does active vs passively managed mean?
Active: more hands-on, trying to beat market
Passive: hands-off
Commodities are considered a ___ risk investment
High
What is a portfolio?
A collection of investments
When a company shares its earnings with stockholders, that distribution of reward is called a _______
dividend
From best to worst, order these bond ratings:
AAA, D, BB, C, A-, BBB
AAA, A-, BBB, BB, C, D
What is one difference between a Mutual Fund and an ETF?
Teacher discretion
a) What is "market capitalization" and
b) how is it calculated?
a) Measurement of a company's size
b) # of shares X price of the share
What is "liquidity"
A measure of how quickly an asset can be turned to cash
What is the S&P 500?
Stock market index that tracks the top 500 largest companies on the stock market- reflects the overall economy
a) Which is riskier, a government or corporate bond?
b) Which usually has a higher interest rate?
a) corporate
b) corporate
Do mutual funds or ETFs generally have more fees?
Mutual funds
Rank these investment from lowest to highest risk:
Commodities, Meme Coins (crypto), Individual Stocks, Government Bonds, Corporate Bonds, Mutual Funds
Government Bonds, Corporate Bonds, Mutual Funds, Individual Stocks, Commodities, Meme Coins
What is an annual report?
A company's report to shareholders about their financial position
Give an example of a primary financial market and a secondary financial market
Primary: IPO, ground floor, new issues of stock
Secondary: stock exchanges (NYSE, NASDAQ)
A "high-yield" bond is also commonly referred to as a _______
Junk bond
Generally, how risky is it to invest in mutual funds & ETFs?
Moderate risk
Define "trading volume" in relation to stock trading
The number of shares sold in a day