Definitions about Stocks and Funds

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Stocks-
• Stocks are appealing to some individuals because they rise in price and to others it is a level of current income. Stocks are highly liquid. Investors are also able to invest in foreign markets.
• Common Stock is a method of equity and is open to the public. Common Stock is the most popular. Each share of stock represents a portion of the proprietorship position in a business. Gives individuals the ability to take part in the return of the firm.Dividends Yields- is a way to measure common stock dividends as a percentage.
• Three reasons to invest in common stock; (1) to use the stock as a warehouse of value, (2) to accumulate capital, (3) to provide a source of income.
• Advantages; (1) the potential return, (2) many stocks are actively traded, (3) no direct management. Disadvantages; (1) risk (2) problem in timing when obtaining the sales, and the doubt of dividends.
• Preferred Stock
• There are some popular forms of Common Stock. Here are just a few; o Blue-Chip Stocks- have a constant record of earnings and dividends. This stock is the best. o Growth Stocks- these stocks earn high rates of growth. o Tech Stocks- these stocks symbolize the technology segment
Bonds- are liabilities
• Two kinds of income with bonds; (1) they provide a generous amount of current income (2) they can often be used to generate substantial amounts of capital gains. Types of Bonds; o Mortgage Bonds- secure asset by claim on real assets o Equipment Trust Certificate- secure bond by types of equipment. o Debenture- is an unsecured bond dispensed on the general credit of the firm.
• Bonds are usually based on the terms or a legal document outlining the features of the bond. Bonds deliver a noteworthy quantity of earnings and it can be used to produce considerable quantities of earnings.
• Bonds are typically low risk and present high ranks of wages with desirable diversification properties. Bonds are extremely flexible investment passage. They can be used either for persons who have high earnings or for those people who go after capital profits.
• Bonds can be used for the conservation and long-standing buildup of capital. For instance, various people, they will devote all or a great amount of their investment funds in bonds because of this sole characteristic.
Mutual Funds
• Mutual funds are monetary services association that collects money from stockholders and capitalize those funds on their behalf in a diversified portfolio of securities.
• The reasons why individuals invest in mutual funds (1) to accomplish diversification in their investment holdings, (2) to acquire the services of specialized cash managers, (3) to produce an attractive rate of return on their investment capital, and (4) and the accessibility they offer.

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