Risk vs Return

Risk vs Return

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Term Definition
Asset class Separate types of investments, such as stocks/stock mutual funds, bonds/bond funds, money market accounts, and international stocks/international stock funds.
Dividend Money paid by a corporation to each shareholder. Typically paid four times a year, these distributions of company profits can be used to reinvest in more shares of the company.
money market A mutual fund or account that invests in short-term, liquid investments. These funds generally pay better than a savings account with a bank but less than a typical stock mutual fund. These funds are considered very low risk.
mutual fund A mutual fund is a pool of stocks, bonds, and other securities managed by an investment company. Individuals can buy shares of the fund and profit from its investment gains.
rate of return The annual amount of money an investment makes, given as a percentage. For example, a $100 investment that is worth $112 the next year had a 12% return.
risk The chance that an investment may lose value. Less-risky investments have a lower rate of return.
return Monetary increase in an investment. If an investment loses value, it is called a negative return.

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