Personal Finance Chapter 2

A mutual fund that attempts to receive the highest capital gains.

Annuities are savings accounts with an insurance company

A bond is a debt instrument by which the company owes you money.

Certificate of Deposit-Usually has a fixed interest rate; intended to be held until maturity.

A common item that can be bought or sold.

Means to spread around. It lowers risk.

The profits from a single stock.

Fixed annuities are at a low interest rate of around 5%, aren't really fixed, and are a bad investment

A futures contract is a standardized contract to buy or sell a specified commodity of standardized quality at a certain date in the future and at a market-determined price.

Types: Money Markets, Single Stocks, Bonds, Mutual Funds, Real Estate, Annuities. Bad investments: Gold, Commodities and Futures, Day trading, and Viaticals.

Growth funds are stock funds that invest in stocks with the potential for long-term capital appreciation. They focus on companies that are experiencing significant earnings or revenue growth, rather than companies that pay out dividends.

Large cap funds are those mutual funds, which seek capital appreciation by investing primarily in stocks of large blue chip companies with above-average prospects for earnings growth.

1. The degree to which an asset or security can be bought or sold in the market without affecting the asset's price. Liquidity is characterized by a high level of trading activity. Assets that can by easily bought or sold, are known as liquid assets.

2. The ability to convert an asset to cash quickly. Also known as "marketability".

A type of stock fund that invests in mid-sized companies. A company's size is determined by itsmarket capitalization, with mid-sized firms generally ranging from $2 billion to $10 billion in market cap.

Money market mutual funds are low risk money market accounts with check writing privileges. (Great for emergency funds.)