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Asset
A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit
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Liablitiy
A individual’s or company's legal debts or obligations that arise during the course of business operations.
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What would happen if no one save?
People would not be able to invest. Only projects that could be financed out of current income would be possible.
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risk reutrn relationship
a situation in which the outcome is not certain, but probabilities for each possible outcome can be estimated.
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410K
tax deferred investment and savings plan that acts as a personal pension fund for employees.
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IRA
- (Individual Retirement Accounts) long term, tax sheltered time
- deposits intended for retirement. (Roth IRAs as well).
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What three things do you need to figure out your morgage?
- How much you borrowed
- The interest rate
- Time of mortgage (most are 30 years)
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What is and List Non- Bank Financial Intermediaries
- Non depository institutions that channel savings to borrowers.
- Finance Company
- Life Insurance Companies
- Realestate Companies
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REIT
Real Estate Investment Trusts borrow money from banks an lend it to construction companies that build homes.
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Name the three parts of a bond
- COUPON- stated interest on the debt
- MATURITY- Life of the bond
- PAR VALUE- The principle or total amount initially borrowed that must be repaid later to he lender at maturity.
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What is Yeild
the annual interest divided by the purchase price
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What is the difference between traditional IRA and Roth IRA
- traditional IRA- pay taxes when money is taken out
- Roth IRA- pay taxes when money is put in
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Junk Bond
a high risk bond
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Bond Rating
- Investors have a way to check the quality of bonds. The bond ratings use letters scaled from:
- AAA: the highest investment grade
- D: stands for default the lowest grade
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Treasury notes and bonds
large long term obligations issued by the federal government and are seen as the safest of all financial assets.
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Corporate Bonds
Issued by corporations and are usually used for long term investment because they can be sold or liquidated quickly
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Municipal Bonds
bonds issued by state and local governments and are regarded as a safe, tax exempt investment.
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Governmetn Savings Bonds
low denomination, nontransferable bonds issued by the U.S government, usually through payroll savings plans.
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Equities
stocks that represent ownership shares in corporations.
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