Investment firms are taxed in a rather peculiar and arcane manner. The firm must report to its shareholders the nature of payments (interest and/or capital gains), and the investor will be taxed upon these profits according to his tax bracket.

An investment firm is a cooperative agency, the purpose of which is investing the contributed funds of its members into a diversified portfolio.

The price will be based upon what buyers are willing to pay for the stock and what sellers are asking for the stock.

We may define a stock exchange as a market place for securities.

The Dow-Jones averages were first published as far back as 1884 and were originally the simple arithmetic averages of 11 active stocks, later increased to 12. By 1896 one average was made for the railroad stocks and another for industrial issues.

Common stock entitlements are somewhat equivalent to special privileges: As the value of the company increases, the common stock holders automatically receive an increased share. For example, we will sup–pose that the Quicker Freezit Corporation has 200,000 shares of capital stock outstanding and wishes to sell an additional 100,000 shares for use in expanding its facilities. A stock dividend is a means of increasing the number of outstanding shares without actually selling any additional stock.

A bond represents a contract whereby the issuing agency borrows money and stands behind such a loan by a pledge of property, so that each bond commonly represents a portion of a mortgage.

That said, bonds are some of the safest endowments out there.

Some of the matters which should be borne in mind are: type of business (railroad, manufacturing, public utility); bond type (mortgage or debenture); term, rate of return, special features (callable, convertible, etc.); financial status of issuing company; coverage of interest charges, which should be ample; relationship to other bond issues.

As an investor, everyone is interested in the effects of inflation upon his investment program, because he is interested in the preservation of the principal amount as expressed in dollars, which he originally invested, and in the earnings received, which is also expressed in dollars.

This means that he must come face-to-face with his over-all needs as relate to degree of risk, rate of return, possibilities of growth, marketability and liquidity.

Investing in a commisary bank (with a checking and savings account, for example) is a great start for a first-time investor. In fact, younger and younger adults are opening checking and savings accounts to save for their futures.