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Stocks, Bonds, and Mutual Funds definitions

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  • Bond
    A financial security representing a promise to repay a fixed amount, including principal and interest, at a specified maturity date.
  • Principal
    The original loan amount invested or borrowed, which is repaid to the investor at the end of a bond's term.
  • Coupon Rate
    The fixed interest rate paid to a bondholder, determining the periodic income received from the bond.
  • Maturity Date
    The specific date when the issuer of a bond must repay the principal to the investor.
  • Bankruptcy
    A legal process where a company cannot meet its debt obligations, affecting the order in which investors are repaid.
  • Stock
    A share of ownership in a company, entitling the holder to a portion of profits and potential capital gains.
  • Shareholder
    An individual or entity owning part of a company and entitled to a share of its profits.
  • Dividend
    A payment made by a corporation to its shareholders, distributing a portion of its profits.
  • Capital Gain
    The profit realized from selling a stock at a higher price than its purchase price.
  • Retained Earnings
    Profits kept by a company to fund future projects instead of being distributed to shareholders.
  • Mutual Fund
    An investment vehicle pooling money from many investors to buy a diversified portfolio of assets.
  • Diversification
    A risk-reduction strategy involving investment in a variety of assets to avoid large losses from any single investment.
  • Portfolio Manager
    A professional responsible for selecting and managing the assets within a mutual fund.
  • Actively Managed Fund
    A mutual fund where the manager frequently buys and sells assets to outperform the market.
  • Passively Managed Fund
    A mutual fund designed to replicate the performance of a specific market index with minimal trading.