cpcu 556 ch 4

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  1. Expense ration (charge)
    The annual percentage charge applied by investment companies against the assets in the fund for manaagement and other services
  2. Account level charge
    The annual percentage charge applied by insurance companies against assets in the account for management and other services
  3. Speculation
    the purchase of securities or other assets in hope that their fluctuations in value will produce relatively large profit in a comparatively short time
  4. Risk averse
    An investment factor or characteristic in which security of the investor's principle and income is paramount
  5. Market discount bonds
    A bond that sells at the "market" price, valued below its maturity values
  6. Reinvestment risk
    The interest rate risk that results from the fact that securities and other investments may generate interest or dividends that may not be able to be reinvested at the same rates of return as when they were originally purchased
  7. Laddering
    Diversifying the bond and CD portions of an investment portfolio by staggering the maturity dates of instruments in the portfolio, to protect the portfolio from interest rate risk
  8. Purchasing power risk
    The uncertainty over the future purchasing power of the income and principle from an investment, whether due to inflation or deflation
  9. Currency risk
    the risk that the value of the foreign currency in which international securities are issued will fall relative to the value of the dollar
  10. Nominal yield
    The annual amount of interest or dividends paid on a security compared with a security's par or face value
  11. Current yield
    The annual amount of income received from an investment compared with its current market price or value
  12. Yield to maturity
    A rate of return measuring the total performance of a bond: the annual interest payments, and either adding the annual gain, or deducting the annual loss, that will be realized if the bond is held until maturity
  13. Average annual compound (geometric) rate of total return
    The annual rate at which an initial investment will accumulate to equal the final value of the investment at the end of the period considered
  14. Marketability
    The ease with which a ready market can be found for an investment should an investor wish to sell
  15. Liquidity
    An investment that has the characteristics of being not only marketable but also highly stable in price
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cpcu 556 ch 4
cpcu 556 ch 4
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