Chapter 7 Vocab Saving-nonuse of income for a period of time so that it can be used later.
Interest-payment people receive when they lend money, allowing someone to use their money.
passbook savings account-account for which a depositor receives a booklet in which deposits, withdrawals, and interest are recorded; also called a regular savings account.
statement savings account-account similar to a passbook savings account except that instead of a passbook, the depositor receives a monthly statement showing all transactions.
money market deposit account-account that pays reality high rates of interest, requires a minimum balance, and allows immediate access to money.
time deposits-savings plans that require savers to leave their money on deposit for certain periods of time.
maturity-period of time at which time deposits will pay a stated rate of interest.
certificates of deposit-time deposits that state the amount of deposit, maturity, and rate of interest being paid; CDs earn more interest than savings accounts, but there is a penalty for early withdrawal� also called savings certificates.
Stock-share of ownership in the corporation issuing the stock; entitles the buyer to a certain part of the future profits and assets of the corporation.
Stockholders-people who have invested in a corporation and own stock; stockholders hold claim against a certain part of the profits.
Dividends-money return a stockholder receives on the amount he or she originally invested in the company by the purchasing stock.
Bond-certificate issued by a company or the government in exchange for borrowed money; a bond promises to pay a stated rate of interest over a stated period of time and to repay the borrowed amount in full at the end of that time.
tax-exempt bonds-bonds sold by local and state governments; interest paid on the bond is not taxed by the federal government.
savings bonds-bonds issued by the federal government as a way of borrowing money; bonds are purchased at half the race value and then increase in value every six months until full face value is reached.
Treasury bills-certificates issued by the US Treasury in exchange for borrowed money in minimum amounts of $10,000 and maturing during a period ranging from three months to one year.
Treasury notes-certificates issued by the US Treasury in exchange for borrowed money with minimum amounts of $1,000 or $5,000 and maturing in 2 to 10 years.
treasury bonds-certificates issued by the US Treasury in exchange for borrowed money in minimum amounts of $1,000 or $5,000 and maturing in1 or more years,
over-the-counter market-purchase and sale of stocks and bonds, often of smaller, lesser- known companies, which takes place outside the organized stock exchanges; most over-the-counter stocks are quoted in the National Association of Securities Dealers Automated Quotations.
capital gain-increase in value of stock or bond from the time it was bought to the time it was sold.
Broker-person who acts as a go-between for buyers and sellers of stocks and bonds.
capital loss-decrease in value of a stock or bond from the time it was bough to the time it was sold.
mutual fund-investment company that pools the money of many individuals to buy stocks, bonds, or other investments.
money market fund-type of mutual fund that uses investors� money to make short-term loans to businesses and banks; most allow investors to write check against their investments in the fund.
inside information-information available to a broker that no one else has; it is illegal for a broker to give out this information and illegal for a client to profit from it.
pension plans-company plans that provide for retirement income.
Keogh Plan-retirement plan that allows self-employed individuals to save a maximum of 15 percent of their income up to a specified amount each year and to deduct that amount from their yearly taxable income.
Individual Retirement Account-private retirement plan that allows individuals or married couple to save a certain amount of their earning per year, dependent on total income; also depending on income, the contribution is not taxed and the interest is tax deferred.
diversification- spreading of investments in several different types of accounts to lower overall risk.