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What’s the difference between saving and investing?

Saving=putting money aside

Investing=putting money to use in order to make more money

What’s the formula to calculate interest?

I=PRT

What are the 3 savings plans?

Savings account, CD, money market account

This type of savings plan requires a minimum deposit and interest is

earned based on government and corporate securities. Usually withdrawals are allowed without

penalties.Money market account

This type of savings plan requires a minimum deposit, money to

remain deposited for a period of time without penalties. Penalties

may be assessed if money is withdrawn before specified time

Certificate of deposit

Name 3 investing options.

StocksBonds

Mutual Funds and Exchange-traded FundsReal Estate

CommoditiesCollectibles

What’s the difference between common stock and preferred

stock?Preferred stock pays dividends before common stock is paid.

Preferred stockholders do not have voting powers; but common stockholders are invited to annual corporate meetings and permitted to one vote per share of stock

owned.Preferred stock is less risky than common stock.

What are dividends?

Part of the profit shared with the stockholders

How are stockbrokers paid?

Commission

What is the largest stock exchange in the US?

NYSE

Name 2 economic factors that could influence investors in

selecting stock.Inflation

Interest ratesConsumer spending

Employment

This ratio is the relationship between a stock’s selling price

and it’s yield.Price per earnings ratio

What’s the formula to calculate yield?

current value – original value

Original value

A promissory note to pay back a specified amount of money at a stated rate on a specific date.

Bond

These bonds are issued by local and state governments for public

service projects

Municipal bonds

An example of these bonds are the EE bond interest is paid once the bond is cashed. The HH bond

interest is paid twice a year, which may be considered

income.US Savings Bonds

What’s the time frame for treasury bills?

91 days to a year

What’s the time frame for treasury notes?

1-10 years

What are corporate bonds used to finance?

Expansion, new products, debt repayment, etc

This type of mutual fund looks for quick growth, but also have an

higher risk than other stock.

Aggressive-growth stock funds

This type of mutual fund concentrates on stocks that pay

regular dividends. Income funds

This type of mutual fund invest in a variety of company stock

around the world.

International funds

This type of mutual fund purchase stocks of companies in

the same industry.Sector funds

This type of mutual fund concentrate in corporate bonds.

Bond funds

This type of mutual fund invest in both stocks and bonds.

Balanced funds

What does ETF stand for?

Exchange-traded fund

Name one advantage of owning real estate.

tax benefits, increased equity, and pride of ownership

Name one disadvantage of owning real estate.

property taxes, interest payments, property insurance, and

maintenance

What are commodities and futures?

grain, livestock, and precious metals. Commodity investors usually agree to buy and sell for an amount at a specified price in the future. Examples may include rice,

cattle, and gold.

Name one example of a collectible.

art work, antique furniture, and autographed items.

What are 2 of the 4 evaluation factors for investment options?

Safety and risk: how likely are you to lose your money?Potential yield: how much profit are you likely to make on this

investment?Liquidity: how fast can you turn this investment into cash?

Taxes: how much will you have to pay in taxes for this investment?