1. Investment Vocabulary

2. Appreciation O An increase in the basic value of an investment

3. Depreciation O A decrease in the basic value of an investment

4. Bear Market O A market characterized by generally falling prices over a period of several months or years

5. Blue Chip O Common stock of a company known nationally for the quality of it’s products and it’s profitability

6. Bond O Certificate representing a loan of money to a corporation or government for a specific period, in exchange for a promise to repay the bondholder the amount borrowed plus interest.

7. Broker O A representative who handles transactions related to investor’s order to buy and sell securities.

8. Bull Market O A market characterized by generally rising prices over a period of several months or years.

9. Capital Gain O The gain obtained when a security is sold for more than the purchase price.

10. Capital Loss O The loss incurred when a security is sold for less than it’s purchase price.

11. Caveat Emtpor O Latin Phrase meaning, “Let the buyer beware”

12. CFP O Certified Financial Planner O An individual who has completed the education requirements of the International Board of Certified Financial Planners

13. CFTC O Commodity Futures Trading Commission O The federal regulatory agency that monitors the futures and options market

14. Commission O A broker’s or adviser’s fee charged for buying or selling securities for an investor.

15. Common Stock O The most basic form of corporation ownership. Owners of common stock have a claim on the assets of a company after those of preferred stockholders and bondholders.

16. Compound Interest O Interest earned on interest that is added to the principal.

17. Discount O Sale of a bond at a price less than face value

18. Diversification O Spreading investment funds among different types of investments and industries

19. Dividend O Payment received by stockholders from the earnings of a corporation

20. DJIA O Dow Jones Industrial Average O Price-weighted average of actively traded stocks

21. Face Value O The amount the bond is worth when it matures.

22. FDIC O Federal Deposit Insurance Corporation O An agency of the federal government created to guarantee bank deposits

23. Financial Planner O A person who advises others about financial issues. This person may need to be registered as an investment adviser if he/she provides investment advice for a fee.

24. Futures Contract O A legal commitment to buy or sell a commodity at a specific future date and price.

25. Hedging O The process of protecting an investment against price increases.

26. Inflation Risk O The risk that the financial return on an investment will lose purchasing power due to a general rise in prices of goods and services.

27. Insider Trading O The illegal use of investment information not generally known to the public.

28. Interest O For the investor, interest is the payment received from a financial institution for lending money to it.

29. IRA O Individual Retirement Account O A tax-defrred savings account

30. Liquidity O The ease with which an investment can be converted into cash.

31. Load Fund O A mutual fund purchased directly by the public that charges a sales commission when bought.

32. Market Risk O The risk that the price of stocks, real estate, or other investments will go down due to business cycles or other causes.

33. Mutual Fund O A company that invests the pooled money of its shareholders in various types of investments.

34. NASAA O North American Securities Administrators Association O An organization of securities administrators charged with enforcing securities laws and protecting investors from fraudulent investments.

35. No Load Fund O A mutual fund purchased directly by the public and does not have a charge for buying.

36. Odd Lot O A unit of less than 100 shares of stock

37. P/E Ratio O The price of a stock divided by per share earnings for a 12 month period

38. Penny Stocks O High risk stocks that generally sell for less than $3 and are not listed and traded on any exchange or stock market. O (Con Artists often deal in Penny Stock frauds)

39. Ponzi Scheme O An illegal investment scam named for its inventor, Charles Ponzi.

40. Portfolio O The total investments held by an individual

41. Preferred Stock O Ownership in a corporation that has a claim on assets and earnings of a company before those of common stockholders but after bondholders.

42. ROI O Return on Investment O A performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the benefit (return) of an investment is divided by the cost of the investment; the result is expressed as a percentage or a ratio.

43. Risk O In an investment, the uncertainty that you will get an expected return. O In insurance, the uncertainty whether a loss will occur.

44. Risk Tolerance O A person’s capacity to endure market price swings in an investment. O Risk tolerance is an important component in investing. An individual should have a realistic understanding of his or her ability and willingness to stomach large swings in the value of his or her investments.

45. Round Lot O 100 Shares of one stock

46. Securities O A broad range of investments instruments, including stocks, bonds, and mutual funds.

47. SEC O Securities and Exchange Commission O A federal agency established to license brokerage firms and regulate the securities industry.

48. Stock O An investment that represents ownership of a company

49. Tax Exempt Investments O Investments not subject to tax on income earned.

50. Time Value of Money O An increase in the amount of money over time as a result of investment earnings.