Essay What Is Stock Anyway

1049 WordsMay 6, 20155 Pages
02.04 What is Stock, Anyway—Assignment Investing Basics Type of Investment Description – explain what it is and how it works Level of Risk and Potential Return – explain. Real-life example of this investment (name or company) Minimum investment amount or time? Easy to start or stop investment? Discuss. CD Certificate of Deposit is a savings note issued by a bank to a depositor who places funds in saving for a set period. Low Risk because of the low return. CDs are generally issued by commercial banks and are insured by the FDIC. Bank of America CDs require a minimum amount of money to invest. CDs are safe ways to save money but it is hard to get the money out. Bank will charge a fee if money is taken out early. Generally ranges from…show more content…
For a large company like McDonald’s, the high start-up cost deters personal investors ($50,000 in 2012). Bonds Bonds are a debt investment, meaning the purchaser of the bond is loaning money to the company or government for a set period. They have a fixed interest rate, meaning the investor knows how much interest will be earned on the loan since the rate will not change. Moderate risk. Purchasing a bond means giving a loan to a company. “T-Bonds” are bonds issued by the U.S. Treasury and are safer than corporate bonds. (Loaning money to the government is safer than loaning money to a private business.) 30-Year Treasury Bond – U.S. Department of the Treasury Bonds require a minimum amount of money to purchase and a minimum length of time to hold on to the bond. Mutual Funds Mutual Funds are a pool of funds collected from many investors in order to purchase stocks, bonds, and other investments in greater amounts. Mutual funds are shares of ownership in a group of companies. Moderate risk; mutual funds can earn significantly more money but can also potentially lose more. Homestead Funds Short Term Bond Fund Mutual funds require a minimum amount of money to invest. Futures Futures are a contract or legal agreement, where an investor agrees to purchase a certain amount of a physical good or financial asset on a specific date for a set price. High (Aggressive) – Have a potentially large return
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