bond
a certificate that is purchased and then sold back later for a specified higher price
debt
an obligation to pay something
equity
the monetary value of a property or business
invest
to spend money or time on an asset with the hopes that it will increase in value over time
return
the money earned on an investment in a certain time period
stock
partial ownership of a corporation
Which best describes what generally occurs in financial markets?
Shares are traded.
Which factors can affect a stock’s price?
-the company’s financial health
-market performance
-the economy
Which are common types of bonds that are currently issued?
-municipal bonds
-equity bonds
-corporate bonds
Since stocks can be traded online, which purpose is best served by markets?
Markets regulate transactions.
How do bonds generate income for investors?
Bonds pay a specified amount at maturity.
Are the buying and selling of stocks centralized activities? Why or why not?
No, people can buy stocks anywhere, and they do not need to go through a market.
Which best describes how an investor makes money from an equity investment?
by selling the asset for a profit
If a company pays dividends on a stock, does that mean that the stock has appreciated in value? Why or why not?
No, the payment of dividends indicates that a company has earned profits.
Bonds are considered to offer a guaranteed return, as they must be honored by law, but which is still a potential risk that investors face?
They both receive capital to use for growth.
Which best describes the role that government and business play in investments?
They both invest money to earn a profit.
Which best describes how an investor makes money off debt?
by selling the debt
Which term refers to the possibility of an investor losing some or all of an investment?
risk
Which is true about investments and risk?
Every investment carries some degree of risk.
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