-long and stable record of earnings and dividends
-unsurpassed in quality
-relatively high priced
-issued by large firms such as Walmart, Nike, IBM, etc.
What is blue-chip stock
100
-gamble on new info that stock will rise
-bought in hope stock price per share will increse
What is speculative stock
100
-bond issued and backed up by full faith and credit of U.S govt.
What is treasury bond
100
principal payments are adjusted to provide protection against inflation
-measured by CPI
What is treasury inflation-indexed bond (TIPS)
100
concerns amount of debt used to finance firm and then possibility that the firm wont have a cash flow to meet obligations on time
What is financial risk
200
-earnings and market price have increased over time
-increased at a rate well above average
What is growth stock
200
-appeal is the dividends payed out
-offers dividend pmts that are expected to increase over time
What is income stock
200
-part of US bond market
-political subdivision of the US govt.
What is agency bond
200
-secured by a claim on real assets such as manufacturing plant
What is mortgage bond
200
inability to liquidate investment convieniently at a reasonable price
What is liquidity risk (or marketability)
300
-stock with total market value less than $2 billion
What is small-cap stock
300
-stock with total market value falling between $2 billion and $10 billion
What is miid-cap stock
300
-issued by state or local govts.
-interest income usually exempt from federal taxes
What is municipal bond
300
issued by a corporation
What is corporate bond
300
something unexpected or major may occur that makes a substantial difference or change in value of investment
What is event risk
400
-total market value is above $10 billion
What is large-cap stock
400
-technology section of market
What is tech stock
400
-municipal bond serviced from income generated by a specific project
What is revenue bond
400
-municipal bond backed by the full faith and credit of the issuing municipalty
What is general obligation bond
400
changing market interest rates; mainly affects fixed income securities
What is interest rate risk
500
-price movements parallel the various stages of the business cycle
-when economy is in expansionary stage, the prices of this type of stock increase
-when economy is in contradictory stage, prices decline for this stock
What is cyclical stock
500
-expected to remain stable during periods of contraction
-price movements are usually contrary to business cycle
-not huge gains but can go up or remain stable
What is defensive stock
500
-pays no annual interest
-sells at deep discount to its par value
What is zero coupon bond
500
-known as 'high yield bonds'
-highly speculative securities that have received low ratings from Moody's or Standard & Poor's
What is junk bond
500
possible changes in price levels that can affect investment returns