1. ECONOMICS STUDY GUIDE

2. Investing – saving in a way that earns income Diversification – distributing funds among a variety of investments to minimize overall risk Stockbroker – a person who handles the transfer of stocks and bonds between buyer and seller

3. Risk – the chance that an investment will decrease in value 401k – a tax deferred retirement savings plan offered to employees by their employer Share of stock – a unit of owership in a corporation

4. Brokerage firm – company that specializes in helping people buy or sell stocks and bonds Capital gain – the profit you earn from selling stock at a higher price than you paid Mutual fund – a group of investments owned by many investors

5. Blue chip stocks – stock of an established and historically successful corporation Growth stocks – stock in a corporation that is expected to experience rapid growth in sales and profits.

6. High yield bond – a bond sold by corporations in financial difficulty that offers a high return but involves significant risk IRA – a savings plan where the savings are tax deferred Transaction – sales or purchases of shares

7. Prospectus – a publication that describes how the fund is operated, the fund’s investing objectives, and the fees that it charges Investment club – the group pools its members money and invests it as the majority requires.

8. Load – a sales fee that you pay when you invest in a mutual fund Capital loss - the amount of money someone loses when they sell their stock for less that what they pay