Mark Saba Investing Quiz:

1. Certificate of deposit: a savings in which you receive interest from bank (FDIC): 1 mo-5yrs 2. risk/return: high potential return = high risk/ low potential return = low risk 3. maturity: finite time period at the end of which the financial instrument will cease to exist and the principal is repaid with interest 4. liquidity: The ability to convert an asset to cash quickly, The degree to which an asset or security can be bought or sold in the market without affecting the asset's price 5. money market fund: safe place to invest easily accessible, cash-equivalent assets. low risk=low return, short term securities (under 1 yr) 6. compound interest: interest on interest, will make a deposit or loan grow at a faster rate than simple interest (accumulated interest) 7. IRA/Roth IRA: retirement funds. IRA: tax deductible contributions (until taken out) Roth IRA: not tax exempt 8. savings: the amount of money that is left over after personal expenses have been met positive savings: traditional savings negative savings: constant credit loans 9. disposable family income: The amount of money that households have available for spending and saving after income taxes have been accounted for. 10. net worth: The amount by which assets exceed liabilities. (total wealth (including belongings)) 11. NYSE: A stock exchange based in New York City, which is considered the largest equities-based exchange in the world 12. NASDAQ: A global electronic marketplace for buying and selling securities 13. AMEX: The third-largest stock exchange by trading volume in the United States, handles about 10% of all securities traded in the U.S. 14. stock exchanges: A marketplace in which securities, commodities, derivatives and other financial instruments are traded. 15. Equities: A stock or any other security representing an ownership interest. 16. Bonds: a debt investment to the government with a fixed interest rate 17. common and preferred stocks: Common stock: security that represents ownership in a corporation, elect a board of directors and vote on corporate policy, low priority. Preferred stock: a class of ownership in a corporation that has a higher claim on the assets and earnings than common stock, do not have voting rights, high priority. 18. 401(k) plans: established by employers to which eligible employees may make salary deferral (salary reduction) contributions on a post-tax and/or pretax basis. (each give 50%) 19. capital gain: Profit that results when the price of a security held by a mutual fund rises above its purchase price and the security is sold 20. dividends: distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders 21. FDIC: Federal Deposit Insurance Corporation - U.S. corporation insuring deposits in the U.S. against bank failure 22. liabilities and assets:

23. 24. 25. 26. 27.

28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40.

liabilities: A company's legal debts or obligations that arise during the course of business operations assets: A resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit. short term and long term goals: having a predetermined set of goals expected to be achieved within a short or long period of time retained earnings: The percentage of net earnings not paid out as dividends, but retained by the company to be reinvested in its core business or to pay debt. inventory: The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale. IPOs: Initial Public Offerings - The first sale of stock by a private company to the public. bull and bear markets: bull markets: A financial market of a group of securities in which prices are rising or are expected to rise. bear markets: A financial market of a group of securities in which prices are falling or are expected to fall. income statement: A financial statement that measures a company's financial performance over a specific accounting period. (revenues & expenses) leverage: The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. brokerage firms: A business whose main responsibility is to be an intermediary that puts buyers and sellers together in order to facilitate a transaction. Compensate via commission. selling short: Short selling is motivated by the belief that a security's price will decline buying on margin: The purchase of an asset by paying the margin and borrowing the balance from a bank or broker. caveat emptor: "let the buyer beware. proclaims that the buyer must perform their due diligence when purchasing an item or service. P/E ratio: Price/Earnings ratio - A valuation ratio of a company's current share price compared to its per-share earnings. annual report: An annual publication that public corporations must provide to shareholders to describe their operations and financial conditions. split stock: A corporate action in which a company divides its existing shares into multiple shares value of the shares remains the same earnings report: A quarterly filing made by public companies to report their performance. (net income, earnings per share, earnings from continuing operations and net sales) sales and earnings report: see above net profit margin: A ratio of profitability calculated as net income divided by revenues, or net profits divided by sales. Earnings per share: The portion of a company's profit allocated to each outstanding share of common stock