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Investment Terms


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Market capitalization. The value of a corporation as determined by the market price of its issued and outstanding common stock. Analysts look at market capitalization in relation to book value for an indication of how investors value a company's future prospects.

Maturity date. Date on which the principal amount of a debt instrument becomes due and payable.

Money market fund. A mutual fund that invests in short-term government securities, certificates of deposit and other highly liquid securities. The fund's net asset value tends to remain a constant $1.00 per share, but an investment in a money market fund is neither insured nor guaranteed by the FDIC or any other government agency. There is no assurance that the share price will be maintained and it is possible to lose money.

Mortgage-backed securities. Issues in which residential mortgages are packaged and sold to investors who receive payments from the interest and principal on the underlying mortgages. (See Ginnie Mae)

Municipal bond. A debt obligation of a state or local government entity. The interest these securities pay is generally free from regular federal income tax and may be free from state and local personal income taxes. The two major types of municipal securities are general obligation bonds and revenue bonds.

Mutual fund. An investment company that operates and professionally manages a portfolio of securities with money raised from shareholders. The portfolio may be invested in one or more asset categories such as stocks, bonds and cash. These funds offer investors the advantages of diversification and professional management, for a management fee.

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