Download Chapter 19 Savings and Investment Strategies

CHAPTER
19
SLIDE 1
CHAPTER
19
Savings and
Investment Strategies
19-1 Saving and Investment Planning
19-2 Stock Investments
19-3 Bonds and Mutual Funds
19-4 Real Estate Investments
19-5 Other Investments
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Principles of Business, 8e
19-1 Saving and
Investment Planning
Goal 1 Explain the basics of saving and
investing.
Goal 2 Identify types of savings and
investments.
Goal 3 Discuss factors to consider when
evaluating savings and investment
alternatives.
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SLIDE 2
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KEY TERMS
● saving
● investing
● yield
● liquidity
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CHAPTER
SAVING AND INVESTMENT
BASICS
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SLIDE 4
● Savings and investment activities
● Determine investment goals
● The growth of savings
● Interest
● Compound interest
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Principles of Business, 8e
CHAPTER
QUARTERLY COMPOUND
INTEREST
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Principles of Business, 8e
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Checkpoint 
● How does saving influence economic
activity?
● Saving benefits the economy by making
more money available for borrowing by
individuals, businesses, and governments.
● When this money is spent, demand for
goods and services increases, resulting in
more jobs and more spending by workers.
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Principles of Business, 8e
CHAPTER
SAVING AND
INVESTMENT CHOICES
● Savings plans
● Savings account
● Certificate of deposit
● Money market account
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● Alternative investments
● Real estate
● Commodities
● Collectibles
● Securities
● Stock investments
● Bond investments
● Mutual funds
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Checkpoint 
● What are the nine main categories of saving and
investment alternatives?
●
●
●
●
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Savings accounts
Certificates of deposit
Money market accounts
Stock investments
Bond investments
Mutual funds
Real estate
Commodities
Collectibles
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Principles of Business, 8e
CHAPTER
EVALUATING SAVINGS
AND INVESTMENTS
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SLIDE 9
● Safety and risk
● Potential return
● Liquidity
● Taxes
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CHAPTER
EXAMPLES OF
DIFFERENT YIELDS
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SLIDE 10
$100 Invested for 20 Years at Different
Yields with Annual Compounding
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INVESTMENT PYRAMID
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Checkpoint 
● What are four factors to consider when
selecting an investment?
● Safety
● Return
● Liquidity
● Taxes
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Principles of Business, 8e
19-2 Stock Investments
Goal 1 Compare the two major types of
stock.
Goal 2 Describe the activities involved with
buying or selling stock.
Goal 3 Identify factors that affect the value
of a stock.
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SLIDE 13
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KEY TERMS
● preferred stock
● common stock
● stockbroker
● stock exchange
● market value
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TYPES OF STOCK
● Preferred stock
● Common stock
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Checkpoint 
● How does preferred stock differ from common stock?
● Preferred stock has priority over common stock in the
payment of dividends.
● Investing in preferred stock is less risky than common stock,
but preferred stockholders generally have no voting rights
within the corporation.
● Common stock represents general ownership in a
corporation and a right to share in its profits.
● Common stockholders are entitled to one vote per share.
● Although preferred stockholders are paid first, their dividends
usually are limited to a set rate.
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Principles of Business, 8e
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SLIDE 17
STOCK TRANSACTIONS
● Using a stockbroker
● Online investing
● Stock exchanges
● Changing stock values
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Principles of Business, 8e
CHAPTER
STOCK MARKET PRICE
REPORT
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Principles of Business, 8e
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Checkpoint 
● What is the purpose of a stock
exchange?
● The purpose of a stock exchange is to
accommodate the buying and selling of
securities.
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STOCK SELECTION
● Stock information sources
● Economic factors
● Inflation
● Interest rates
● Consumer spending
● Employment
● Company factors
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CHAPTER
PROCESS FOR DECIDING
STOCK PURCHASES
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1. Observe and analyze economic and social trends.
2. Determine industries that will be affected.
3. Identify companies in those industries.
4. Decide whether to buy, sell, or hold the stock of those companies.
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Checkpoint 
● How do various economic factors affect stock prices?
● Inflation affects stock prices by causing lower spending by
consumers, reducing company profits out of which dividends
are paid.
● Falling or rising interest rates can also increase or decrease
company profits as the cost of money changes.
● The employment rate also affects stock prices; when more
people are employed, they spend more money on a
company’s products and stock prices rise.
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Principles of Business, 8e
19-3 Bonds and
Mutual Funds
Goal 1 List types of government bonds.
Goal 2 Describe features of corporate
bonds.
Goal 3 Describe various types of mutual
funds.
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SLIDE 23
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KEY TERMS
● municipal bond
● corporate bond
● mutual fund
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GOVERNMENT BONDS
● Municipal bonds
● U.S. savings bonds
● Other federal securities
● Federal notes (T-notes)
● Treasury bills (T-bills)
● Treasury bonds (T-bonds)
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Principles of Business, 8e
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Checkpoint 
● List the types of bonds issued by the
federal government of the United States.
● The types of U.S. savings bonds issued by
the federal government are Series EE
bonds, Series HH bonds, and I bonds.
● The federal government also issues
Treasury bills and Treasury notes.
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CORPORATE BONDS
● Bond components
● Bond values
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CHAPTER
Checkpoint 
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● What affects the value of a bond?
● The value of a bond is affected by changing
interest rates.
● If the bond’s stated rate is lower than interest rates
on similar bonds, investors will want to buy the
bond for less than its face value.
● If the bond’s stated interest rate is higher than
interest rates on similar bonds, the seller of the
bond will want to receive more than its face value.
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MUTUAL FUNDS
● A mutual fund is an investment fund set up
and managed by companies that receive
money from many investors.
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TYPES OF MUTUAL FUNDS
● Aggressive-growth stock funds
● Income funds
● International funds
● Sector funds
● Bond funds
● Balanced funds
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MUTUAL FUND VALUES
● Shares of the mutual fund
● Value of each share
● Net asset value (NAV)
● Operating expenses
● Earnings
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Checkpoint 
● What are the main types of mutual
funds?
● The main types of mutual funds are
aggressive-growth stock funds, income
funds, international funds, sector funds,
bond funds, and balanced funds.
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Principles of Business, 8e
19-4 Real Estate
Investments
Goal 1 Describe home buying activities.
Goal 2 Explain the benefits of home
ownership.
Goal 3 Discuss the costs of home
ownership.
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SLIDE 33
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KEY TERMS
● real estate
● mortgage
● equity
● assessed value
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SELECTING HOUSING
● Renting your residence
● Owning a mobile home
● Buying a home
● Services of real estate agents
● Other real estate professionals
● Buying a condominium
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Checkpoint 
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SLIDE 36
● What are four available housing
alternatives?
● Renting
● Owning a mobile home
● Buying a traditional home
● Buying a condominium
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Principles of Business, 8e
CHAPTER
BENEFITS OF HOME
OWNERSHIP
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● Tax benefits
● Increased equity
● Pride of ownership
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CHAPTER
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SLIDE 38
Checkpoint 
● What are the main benefits of home
ownership?
● Tax benefits
● Increased equity
● Pride of ownership
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CHAPTER
COSTS OF HOME
OWNERSHIP
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● Property taxes
● Interest payments
● Property insurance
● Maintenance
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Checkpoint 
● What are common costs of home
ownership?
● Common costs of home ownership are
property taxes, interest payments, property
insurance, and maintenance.
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Principles of Business, 8e
19-5 Other Investments
Goal 1 Discuss types of commodity
investments.
Goal 2 Explain the use of collectibles as an
investment.
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SLIDE 41
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KEY TERMS
● commodities
● futures contract
● collectibles
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CHAPTER
COMMODITIES AND
FUTURES
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● Commodity exchanges
● Agricultural commodities
● Gold, silver, and precious metals
● Currency and financial instruments
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Checkpoint 
● What types of commodities are
commonly used with futures contracts?
● Types of commodities commonly used with
futures contracts are agricultural
commodities, such as grain and livestock,
and precious metals.
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COLLECTIBLES
● Types of collectibles
● Collectible values
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Principles of Business, 8e
CHAPTER
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SLIDE 46
Checkpoint 
● What are common types of collectibles?
● Common types of collectibles are stamps,
coins, sport trading cards, and antiques, as
well as unusual items purchased as
investments.
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Principles of Business, 8e