Risk Management and Inflation
The potential for losing something of value
Risk
This is the reward for lending money
Interest
These institutions provide security and convenience for customers, offering checking and savings accounts
Commercial bank
This employer-sponsored plan helps workers save for retirement
401k
Ownership in a corporation is represented by this
Stock
Large-Cap Stocks
Most likely to pay dividends because they are stable and profitable.
This rate measures the increase in general prices and decrease in purchasing power
Inflation
Interest calculated on both the principal and previous interest is called
Compound Interest
These intermediaries connect buyers and sellers to facilitate transactions
Brokerage
A contract where an insurance company makes periodic payments to an investor
Annuity
A loan an organization in exchange for interest payments
Bond
Mid-Cap Stocks
Some pay dividends, but growth is prioritized.
The ease with which an asset can be converted into cash without affecting its price
Liquidity
Simple interest
I=PxRxT
These companies specialize in loans, deposits, and currency
Financial Institutions
This tax advantaged savings plan is specifically designed to save for future college cost
This is the profit earned from an investment
Return
Small-Cap Stocks
Least likely to pay dividends as they focus on expansion.
Precious Metals
This is the process of restricting expenses and accumulating unspent money
Savings
These financial intermediaries provide services for businesses and governments
investment banks
An agreement that allows pooling of risk through premiums
Insurance Companies
A risk management technique spreading assets across various investments
Diversification
If you want safety & stability, something for retirement
Large-Cap
A pool of funds collected from many investors to invest in securities like stock and bonds
Mutual fund
This happens when investments generate earnings, and then those earnings generate their own earnings
Compounding
These corporations pool risk by collecting premiums from customers
Insurance Companies
A savings account that pays a fixed interest rate for a set period of time.
Certificate of deposit (CD)
Rare items with high economic value often sough by collectors
Collectibles
If you want high risk & big rewards
Small-Cap