1. Investing in a Market Economy
Unit 11.2
Unit 11.3

2. Investing (11.2) Investment Objectives Risk Return Diversification
Retirement
House
College
Risk
Credit risk (The borrower can fail or bankrupt)
Liquidity risk (Cash tied up in non-cash investments)
Inflation rate risk (Interest rates change, lowering return)
Time risk (Your money might be unavailable for a while)
Return
The higher the return, the higher the risk
Diversification

3. The Stock Market (11.3) Stock Exchange Stockbroker
OTC (over the counter)Market
Deals with stocks not on an exchange
Stocks
Capital Gains
Dividends
Common Stock
Preferred Stock
Future
Buying a commodity now that will not be available until later, locks in price
Option
Similar to a Future, but the buyer can opt out

4. Stock Indexes Stock Index Bulls and Bears
DJIA (Dow Jones Industrial Average)
NASDAQ
S&P 500 (Standard and Poor’s)
Nikkei (Japan)
Hang Seng Index (Hong Kong)
DAX (Germany)
FTSE 100 (UK)
Bulls and Bears