investing in your future vocabulary personal finance chapter 11

Investing in Your FutureVocabulary

Personal FinanceChapter 11

Investing in Your Future

Investing The use of savings to earn a

financial return http://dictionary.reference.com/bro

wse/investing?s=t

Investing for Your Future

Inflation A rise in general level of prices


Rule of 72 Technique for estimating the

number of years required to double your money at a given rate of return


Risk The chance that an investment’s value

will decrease


Diversification An investment strategy for

spreading risk among different types of investments


Financial advisers Professional investment planners

who are trained to give investment advice


Annual report An SEC-required summary of a

corporation’s financial results for the year and prospects for the future


Bonds An investment that represents the

debt of a company or a government


Discount bond A bond purchased for less than its

maturity value


Mutual fund A professionally managed group of

investments bought using a pool of money from many investors


Annuity A contract sold by an insurance

company that provides the investor a series of regular payments, usually after retirement


Stock A unit of ownership in a corporation


Futures Contracts to buy and sell

commodities or stocks for a specified price on a specified date in the future


Option The right, but not the obligation, to

buy or sell a commodity or stock for a specified price within a specified time period


Penny stocks Low-priced stocks of small

companies that have no track record


Transition


A bond purchased for less than its maturity value.

A. AnnuityB. Discount bondC. DiversificationD. Investing


A contract sold by an insurance company that provides the investor a series of regular payments, usually after retirement.



An investment strategy for spreading risk among different types of investments.



The use of savings to earn a financial return.



A rise in the general level of prices.A. Annuity B. Bonds C. InflationD. Rule of 72


If Ricardo invested $1000 at a 5 percent average return, how many years would it take for his investment to be worth $2000?


Transition


The chance that an investment’s value will decrease.

A. Annuity B. Financial advisersC. Risk D. Stock


An SEC-required summary of a corporation’s financial results for the year and the prospects for the future.



A unit of ownership in a corporation.A. Annuity B. Financial advisersC. Risk D. Stock


Professional investment planners who are trained to give investment advice.



An investment that represents the debt of a company or a government.

A. Annuity B. Bonds C. Rule of 72D. Stock


Michael Johnson would like to invest in XYZ Corporation. He heard that the company is big and powerful. You’ve never heard of it.

What kinds of information should he have before he invests in this company?

Where can he get that information?


Transition


A professional investment managed group of investments bought using a pool of money from many investors.

A. Futures B. Mutual fundsC. OptionD. Penny stocks


Contracts to buy and sell commodities or stocks for a specified price on a specified date in the future.



The right, but not the obligation, to buy or sell a commodity or stock for a specified price within a specified time period.



Low-priced stocks of small companies that have no track record.



Technique for estimating the number of years required to double your money at a given rate of return.

A. Mutual fundsB. OptionC. Penny stocksD. Rule of 72


Friends of your family, who were recently married, are now finding that they have money left over each month that they could invest. They would like to consult a financial adviser but don’t know one.

What tips would you give them about selecting a financial adviser?


Kim Possible would like to invest $10,000 she inherited from her uncle. She would like to have the money for her daughter's college education starting in eight years. She does not like to take a lot of risk because she cannot afford to lose $10,000.

What course of action would you suggest for Kim?


Assume that Kim Possible invested her $10,000 in a way that earned an average of 6 percent annual return. Assume that college will cost $5,000 a year for four years.

College planner tool

investing in your future vocabulary personal finance chapter 11

Documents

investing slide

future slide

future transition slide

future annuity

future diversification

future discount

future risk

future stock