Tips and Tools For Financial Success - Newton Free Library

Investment Terms and Definitions
Blue Chip – a company that is well-known with a history of growth and profits
His parents invested in blue chip stocks for his college fund.
Bonds – long-term debt securities issued by corporations and governments usually
paying interest on a regular basis
The city issued bonds to raise money for a new housing project.
Brokerage – firms licensed by the Securities and Exchange Commission (SEC) to buy
and sell securities for clients and for their own accounts
He went to a brokerage to purchase shares of stock.
Certificates of Deposit – an interesting-earning investment issued by a bank with a
fixed amount and term
My bank offered a high interest 5-year certificate of deposit.
Commission – a fee charged by a broker to buy or sell shares of stock
The broker made a large commission on the sale of the new technology stock.
Diversification – a strategy of investing in several types of investments in order to
maximize profit and reduce risk of loss
Her investment portfolio held securities in many different types of industries in order
to achieve diversification.
Dividend – payment that stockholders receive from a company’s profit
The healthcare stock that she owned paid a quarterly dividend.
Invest – use money to make more money
Some people invest in art along with stocks and bonds.
Liquidity – easily sold or converted into cash
Stocks traded on the New York Stock Exchange have a high liquidity.
Maturity – the date that a security is due and the initial investment plus any
remaining interest owed is repaid
The maturity date for her bond is April 1, 2014.
Mutual Fund – an investment that is made up of several securities managed by a professional
He chose to invest in a mutual fund because he wanted the expertise that a fund
manager provides.
Securities – all types of investments such as stocks, bonds, funds, etc.
The Securities and Exchange Commission regulates investment securities.
Stocks – shares of ownership in a company
Some stocks pay dividends several times a year.
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