Investment Vocabulary Quiz

A company-sponsored retirement account to which employees can contribute income directly into an investment account. The employer may match a part of all of that contribution.

A market where the prices of stocks fall which encourages investors to sell.

A market in which share prices are rising, encouraging buying.

A security in which the investor loans money to a company or government, which then pays regular interest to the investor and returns the principle on the maturity date.

The measurement or grading given to a bond. This indicates the bond's creditworthiness, which is the likelihood that the bondholder will be paid back.

Tax on the profit from the sale of an asset.

Occurs when you sell an asset for more than what you originally paid for it (profit).  Almost any type of asset you own is considered a capital asset.

Earning interest on the interest plus the principle invested.

The annual interest rate paid on a bond is expressed as a percentage of the face value and paid from the issue date until maturity. 

The practice of investing in a large variety of stocks, bonds, and/or funds as a way to reduce your overall risk.

When your employer contributes money to your 401(k) account to reflect the contributions you've made out of your compensation.

A sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits.

A portfolio of stocks or bonds designed to mimic the composition and performance of a financial market index. These funds have lower expenses and fees than actively managed funds because the human element of investing is removed; no one is choosing the individual stocks. They are designed to follow certain preset rules.

An account is set up at a financial institution that allows an individual to save for retirement.

Rate of increase in prices over a given period of time decreasing the purchasing value of money.