Chapter 8

Vocab 1 100 Vocab 2 100 Risk 100 100 100 Investments Roll the dice 100 100 100 100

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Distribution of money, stock, or other property that a corporation sometimes pays to a stockholder.

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Profits that are reinvested in the company.

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Profit from the sale of assets such as stocks, bonds, or real estate.

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The written pledge of a government or municipality to repay a specified amount of money with interest.

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Discloses information about a companys earnings, assets, and liabilities; its products or services; and the qualifications of its management.

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Gives the owner the advantage of receiving cash dividends before common stockholders receive any.

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The Answer is: Income that is not taxed.

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A companys written pledge to repay a specified amount of money, along with interest.

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Income that is taxed at a later date.

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The ability to buy or sell an investment quickly without substantially affecting its value.

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This risk is described as the general increase in the price of goods and services.

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This risk applies to common stock, preferred stock and bonds. This risk is best described as the possibility the corporation will become insolvent.

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This risk that your investment may lose value because of movements in interest rates.

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The risk that even though you invested in an excellent company that is performing well the broad direction of the market may erode profits.
DAILY DOUBLE

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The risk that corporate information, accounting regulations and overall business operations need not be reported accurately under the law. The investor must also realize there may be currency transactions that can erode profits or increase losses?

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Provides the most basic form of corporate ownership and it entitles you to voting privileges?

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An investment alternative in which investors pool their money together to buy stocks, bonds and other securities based on the selections of professional managers who work for an investment company.

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Cash, CDs, savings accounts, money market accounts, U.S. Government bonds and retirement accounts are what level in the investment pyramid? What is the risk of these investments?

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This level in the investment pyramid includes options, commodities, precious metals and gems, speculative stocks, junk bonds and collectibles. What is the risk to the investor?

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This level in the investment pyramid includes income and growth stocks, mutual funds, real estate and convertible bonds? What is an income and growth stock?

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What is the dividend on 600 shares of stock which the company pays a $.45 dividend ?

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How many shares of stock could you buy with $10,000 if the last trade price was $35.92 and there is a $7.00 commission on the trade?

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If you purchased 800 shares of a companys stock at a price of $60.36 and sold those 800 shares at the last trade price of $54.48, what is your profit or loss?

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If the Bid of the stock price is $54.48 and the Ask is $54. 60 at what price is someone willing to buy stock?

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Ashley put $1,000 into a CD for one year at 3% interest. The inflation rate that year was 5%.

How much of her buying power did she lose in percentage and cash terms? Calculate how much it would cost to buy the same investment at the end of the year?

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