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Words and Definitions |
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Bond |
a security issued by a corporation or public institution which usually carries a fixed interest rate and a set maturity date for the redemption of principal. Our state issued a bond to finance a major construction project. |
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CD |
an abbreviation for Certificate of Deposit. Usually issued by a bank, it can earn a higher rate of interest than a regular savings account. The dollar amount, term and interest rate are normally fixed at the time of purchase. Comparing rates of CDs at different banks can result in finding the highest return |
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Club Account |
a special type of savings account where you make regular deposits for a specific purpose. She used the savings from her vacation club account to take a cruise to Hawaii. |
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Diversification |
the practice of varying investment options to minimize risk of loss. She invested in stocks, bonds and mutual funds to create a portfolio with diversification. |
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Equity |
ownership in a company usually represented by shares of stock His compensation at work included a salary and equity in the company in the form of common stock. |
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Home Equity |
the market value of a residence in excess of an existing mortgage. The couple was able to get a home equity loan to build an addition to their house. |
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Investment |
a savings option or property that is purchased with the expectation that its value will increase over time. He made an investment in the stock market by purchasing shares in a technology company. |
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Liquidity |
the ease with which assets can be turned into cash without losing value. People who prefer liquidity in their investments often put their savings in money market funds. |
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Mutual Fund |
a professionally managed collection of money from investors which may include stocks, bonds and other financial instruments. Many people like to invest in a mutual fund because it offers diversification. |
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Savings Account |
an account at a bank that earns interest. Parents often open a special savings account to help pay for their children's college education. |
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Stocks |
shares of ownership in a corporation which sometimes have dividends. Many people buy stocks when the price is low and hope to sell them when the price is high |
