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Investing Types of Businesses Stock Market Bonds Vocabulary SMG Info 10 Point 10 Point 20 Points 20 Points 30 Points 30 Points 40 Points 40 Points 50 Points 50 Points

List 4 ways that people can invest their money.

1) Stocks 2) Bonds 3) Mutual Funds 4) Property 5) Education

Which type of investment is riskier, stocks or bonds?

Purchasing Stocks is riskier because you are not guaranteed to make money. You could lose everything you invested.

An investor who has purchased shares of ownership in a corporation is called________.

A Stockholder or Shareholder

When investing in the stock market you should buy ____, & sell _____!

Buy LOW & Sell HIGH!

What is the main purpose of investing?

The purpose of investing is to make your money grow. You are taking a risk in the hope that you will make your money increase.

What is a sole proprietorship? Give an example!

A sole proprietorship is a business owned by 1 person. Example: doctor

What is a partnership? Give an example!

A partnership is a business owned by more than 1 person. Example: Law firm

What is a corporation? Give an example!

A corporation is a business organization owned by a group of investors called stockholders. Example: Mc. Donalds

Which type of business is the only one that is public & can be traded on the stock market?

Corporations

All businesses need investment capital. What is investment capital?

Investment capital is the money required to start a business.

What is the Dow Jones Industrial Average & why is it important?

The Dow Jones IA is the average value of 30 large industrial stocks. It is important because it helps us measure the overall health of the market. It tells whether the market is strong and people are buying stocks & when the market is not doing as well and fewer people are buying stocks.

Tell about the origins for the terms Bull Market & Bear Market.

The terms : Bull Market & Bear Market were used to describe the movement of the stock market based how the animals attack. A bull thrusts its horns Up into the air, so this term is used to describe when the market is UP. A bear swipes its paws DOWN, so this term is used to describe when the market is DOWN.

What is a stock?

A stock is a share of ownership in a corporation.

Why might people invest in stocks?

-It can be a fast way to earn money -Usually more lucrative than buying bonds -You can earn dividends from companies

Explain the difference between Bull Market & Bear Market.

Bull market is a symbol that means the Dow Jones IA is up. It is a sign that the market is strong and that people are confident & buying stocks. Bear market is the opposite. It tells us that the Dow Jones IA is down. Fewer people are buying stocks. They are not confident & stock prices are dropping.

True or False A bond is like an I. O. U. or lending someone money.

True

True or False Bonds are more lucrative (you can make more money) than stocks are.

False

Name 2 Types of Bonds:

Corporate Bonds & Government Bonds

Explain what a BOND is:

When buying a bond, you are lending a corporation or government money. In return you get a certificate that promises the corporation/government will pay you back the money plus interest.

Why might people want to invest in bonds and not stocks? Give 2 reasons.

-Bonds are a safer investment -You get back the original amount plus interest -Almost always guaranteed to make back the money

A share of a company’s profits paid to stockholders is called a ______.

Dividend

What is collateral?

Collateral is something of value that a borrower promises to a lender as a guarantee that a loan will be repaid.

What is a stock exchange? Give an example.

A stock exchange is a place where the buying & selling of stocks takes place. Example: NYSE

True or False The stock market is a place you can go to buy things.

False!

What does speculation mean?

Speculation is your thoughts or guesses about something. In business it means taking a risk based on your what you think will happen, in the hopes that you make a profit.