22.2 - Building a Portfolio questions and answers latest updated

22.2 - Building a Portfolio questions and answers latest updated Index fund A collection of stocks, bonds and other investments in one grouping generally without a professional manager. Market index A collection of stocks, bonds and other investments that represents one segment of the financial market. S&P 500 An index of the 500 largest companies in the U.S. stock market. Mutual funds A collection of stocks, bonds and other investments in one grouping typically managed by a professional. Brokerage fees Annual fees charged by a financial institution to maintain an account for you. Trade commissions Fees paid to brokers who provide a service by buying and selling investments like stocks, bonds, or other investments. Mutual fund transaction fees Fees charged for buying and selling mutual funds. Expense ratios Annual fees charged by mutual funds, index funds and investment funds. Sales loads Commissions paid to brokers. Advisory fees Fees paid to financial advisors. Dollar-cost averaging Investing a specified dollar amount on a regular basis no matter what the market is doing. Portfolio Investments held by a person or organization. Brokerage firm A company that buys and sells stocks and bonds. Diversification Investment strategy to reduce risk by including stocks, bonds, and a variety of higher and lower risk investments in the portfolio. Rate of return Taking the earnings or profits gained from the investment and dividing it by the cost or the amount paid for the investment.