SAVING AND INVESTING UNIT 2 INTRODUCTION TO FINANCIAL MARKETS

VOCABULARY Diversification—spreading out savings and investments over multiple categories

VOCABULARY Dividend—are the distribution of a company's profit or earnings to the company's shareholders or stockholders

VOCABULARY Liquid—can be bought and sold easily

VOCABULARY Stock—an investment product that represents partial ownership of a compnay or corporation

VOCABULARY Prospectus—the legal document describing the mutual fund

VOCABULARY The return—more money Investors run the risk of losing their money when they invest, but they stand to gain a return—more money—if the investment is profitable.

VOCABULARY Securities—investment instruments such as stocks and bonds

VOCABULARY Tax-exempt—taxes do not have to be paid

VOCABULARY Appreciation—to increase

VOCABULARY Mutual fund—invests the pooled money of its shareholders in various types of investments

VOCABULARY Bond—means investors have loaned money to a company or a governmental entitiy

VOCABULARY No-load—no sales commission An employee takes your order to buy or sell, or can offer limited support. The investor is fully responsible for understanding the investment.

Talking Points Savings Accounts How does it relate to future investing?

Talking points Liquid What does the use of the word liquid usually mean?

Talking Points Risk Tolerance Conservative vs high-risk

Talking Points The greater the risk, the higher the rate of return.

Talking Points Dividends Who gets a dividend?

Talking Points Municipal What does the word municipal mean?

Talking Points Management fee What is this?