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| An asset that generates a return. For example, stocks pay dividends and bonds pay interest, so these are considered investments |
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| Investment return received directly from the company or organization in which you've invested, usually in the form of dividends or interest payments |
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| An asset whose value depends solely on supply and demand, as opposed to being based on the return that it generates. For example, gold coins and baseball cards are worth more in the future only if someone is willing to pay more for them |
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| Securities whose value is derived from the value of other assets |
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| A security that gives its owner the right to buy or sell an asset - generally common stock - at a specified price over a specified period |
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| The date at which the borrower must repay the loan or borrowed funds |
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| The stated amount on the face of a bond, which the firm is to repay at the maturity date |
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| The interest to be paid annually on a bond as a percentage of par value, which is specified in the contractual agreement |
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| A fractional ownership in a corporation |
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| A payment by a corporation to its shareholders |
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The gain (or loss) on the sale of a capital asset. For example, any return (or loss) from the appreciation (or drop in value) in value of a share of stock would be considered a capital gain (or loss).
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| Nominal (or Quoted) Rate of Return |
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| The rate of return earned on an investment, unadjusted for lost purchasing power |
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| The current or nominal rate of return minus the inflation rate |
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| The risk of fluctuation is security prices due to changes in the market interest rate |
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| The risk that rising prices will eat away the purchasing power of your money, and that changes in the anticipated level of inflation will result in interest rate changes, whcih will in turn cause security price fluctuations |
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| The risk of fluctuations in security prices resulting from good or bad management decisions, or how well or poorly the firm's products are doing in the marketplace |
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| The risk associated with a company's use of debt. If a company takes on too much debt and can't meet its obligations, investors risk the company defaulting or dropping in stock value |
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| Risk associated with the inability to liquidate a security quickly and at a fair market price |
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| Risk associated with overall market movements |
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| Political and Regulatory Risk |
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| Risk resulting from unanticipated changes in the tax or legal environment |
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| The risk of fluctuations in security prices from the variability in earnings resulting from changes in exchange rates |
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| The risk to bondholders that a bond may be called away from them before maturity |
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| The redeeming of a bond before its scheduled maturity. Many bonds are callable |
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| The elimination of risk by investing in different assets. It works by allowing the extreme good and bad returns to cancel each other out. The result is that total variability or risk is reduced without affecting expected return |
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| A group of investments held by an individual |
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| Systematic or Market-Related or Non-diversifiable Risk |
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| that portion of a security's risk or variability that can't be eliminated through investor diversification. This type of variability or risk results from factors that affect all securities |
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| Unsystematic or Firm Specific or Company-Unique Risk or Diversifiable Risk |
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| Risk or variability that can be eliminated through investor diversification. Unsystematic risk results from factors that are unique to a particular firm |
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| An attempt to ensure that the investor's strategy reflects his or her investment time horizon and is well diversified, generally with assets in several different classes of investments, such as domestic common stocks, international common stocks, and bonds |
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| A market in which all relevant information about the stock is reflected in the stock price |
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