Financial Algebra Vocab FALL Study Guide

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What is a mutual fund?

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A mutual fund is an investment vehicle that pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities, helping to reduce individual risk.

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What does cash outflow mean?

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Cash outflow refers to money that is going out of an individual's or organization's accounts, such as expenses like bills, rent, or purchases.

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What is the role of the SEC?

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The SEC (Securities and Exchange Commission) protects investors, promotes fairness, and shares information about companies to help investors make informed decisions.

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Define investments.

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Investments are purchases of goods or assets that are not consumed immediately but are used to create wealth or generate income in the future.

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What is income tax?

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Income tax is a tax imposed on individuals or entities based on their income or profits, typically due annually on April 15th in the U.S.

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What is a stock?

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A stock represents ownership in a company and constitutes a claim on part of the company’s assets and earnings.

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What is a bond?

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A bond is a fixed income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental.

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What is cash inflow?

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Cash inflow refers to money that is received by an individual or organization, such as income from sales, investments, or other sources.

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What does ROI stand for?

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ROI stands for Return on Investment, a measure used to evaluate the efficiency or profitability of an investment.

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What is the purpose of the FDIC?

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The FDIC (Federal Deposit Insurance Corporation) protects depositors by insuring deposits in member banks, ensuring safety in case of bank failures.