Chapter 6 Vocabulary

Purchasing a financial product or valuable item with the goal of increasing wealth over time in spite of possible loss

• Diversification

• Investment

• Inflation

• Investment Portfolio

Measure of the likelihood that something will be lost.

• Investment

• Risk Tolerance

• Risk

• Rate of Return

Amount of uncertainty a person is willing to handle

• Risk Tolerance

• Risk

• Volatility

• Yield

Spreading risk by putting money in different types of investments

• Inflation

• Level of Risk

• Investment Portfolio

• Diversification

Collection of the investments a person has made

• Investment Portfolio

• Investing

• Diversification

• Volatility

Quick and unexpected changes in value or price

• Yield

• Rate of Return

• Level of Risk

• Volatility

Amount earned on an investment for a given period of time

• Rate of Return

• Volatility

• Inflation

• Appreciation

Degree to which an investment may deviate from its rate of return

• Volatility

• Risk

• Level of Risk

• Risk Tolerance

Amount of money earned on the investment, usually expressed as an annual percentage

• Yield

• Appreciation

• Volatility

• Diversification

Increase in the value of an investment

• Yield

• Appreciation

• Inflation

• Volatility