1. CHAPTER 6 NOTES

2. Statement savings account: savings account where the depositor receives a monthly statement showing all transactions. Money market deposit accounts: account that pays relatively 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 the end of which time deposits will pay a stated rate of interest. Certificates of deposit (CD): time deposits that state the amt. of deposit, maturity and rate of interest being paid. If you withdraw early you pay a penalty.

3. Federal Deposit Insurance Corporation (FDIC): each depositor's money in a particular savings institution is insured up to $250,000. If institution fails each person will be paid full amt. of savings up to $250,000. Bond: certificate issued by a company or the gov't in exchange for borrowed money. Tax-exempt bonds: bonds sold by local and state gov'ts; interest paid on the bond is not taxed by the federal gov't. Savings bond: bonds issued by the federal gov't as a way of borrowing money; they are purchased at half the face value and increase every 6 months until full face value is reached. Mutual fund: investment company that pools the money of many individuals to buy stocks, bonds or other investments.

4. Dow Jones Industrial Avg.: tracks the stocks of 30 of the largest American companies to measure the well-being of the stock market. Standard and Poor's: tracks the indexes of 500 companies. Over-the-counter market: electronic purchase and sale of stocks& bonds often of smaller companies, which takes place outside the organized stock market. Securities & Exchange Commission: responsible for administering all federal securities law. Regulates brokerage firms, stock exchanges and most businesses that issue stock. Capital gain: increase in value of an asset from the time it was bought to the time it was sold. Capital loss: decrease in value of an asset or bond from the time it was bought to the time it was sold.

5. Treasury bill: certificates issued by the U.S. Treasury in exchange for a minimum amt. of $1000 and maturing in 3 months- a year. Treasury notes: certificates issued by the U.S. Treasury in exchange for minimum amts. of $1000 and maturing in 1-10 years. Treasury bonds: certificates issued by U.S Treasury in exchange for minimum amts. of $1000 and maturing in 10 or more years. Money market fund: type of mutual fund that uses investor's money to make short-term loans to businesses and banks.

6. Pension plans: company plans that provide retirement income for they workers. 401k plan: allows a certain portion of your check to be withheld and the company matches that amt. 1.Major benefits: do not have to pay federal income tax immediately on it or the interest that you earn up to a certain amt.. 2.If you withdraw money prior to retirement age you will pay a tax penalty. 3.Otherwise you only pay taxes as you withdraw from the plan at retirement. Your yearly income will be less so your tax rate is lower.

7. Individual Pension Plans Keogh Plan: retirement plans that allow self- employed individuals to save a max. of 15% of their income up to a specified amt. each year and to deduct that amt. from their yearly taxable income. Individual retirement account: allows individuals and married couples to save a certain amount of untaxed earnings per year ($5500) with the interest being tax-deferred. You only pax taxes after you start withdrawing at 59 1/2. Roth IRA: private retirement plan that taxes income before it is saved, but which does not tax interest on that income when funds are used upon retirement.

8. Buying Real Estate: an investment; houses tend to increase in price overtime. Can not turn it into cash easily and may need to put money into the house in order to sell it as a gain. Diversification: spreading of investments among several different types of accounts to lower overall risk.