Types of Investments
Mutual funds that are properly d________ will have investment dollars spread broadly among different classes of financial assets.
diversified
The degree of uncertainty of return on an asset; in business, the likelihood of loss or reduced profit. R___.
risk
When you do research before investing in stocks, are you making the risk of investment higher or lower?
Lower
Type of investment you buy in a dollar amount from a bank for a predetermined period of time. C__________ __ D______.
Certificate of Deposit
What type of investment is done with a group of investors that pool their money together?
mutual fund
A portion of ownership in a company or mutual fund.
What is a share
Which has more risk?
Certificates of Deposit or Stocks
stocks
As the value of stocks go up, you may be paid that profit in cash or more stocks. This is called stock d_______.
dividends
stock
Type of investment you do through your employer, and the employer usually matches your contribution by a certain percentage.
401K
True or False? Information, even if not true, can cause a stock's value to drop.
True
A collectoin of your investments. P________
portfolio
Typically, stock portfolios that have greater risk will also have ______ _____
Greater return
One of the three major stock exchanges in the U.S.
NASDAQ, NYSE, AMEX
Type of risky investment where you purchase a home that needs improvement with the intent of immediately reselling the home after you make the improvements.
House Flipping
These are a debt instrument where the issuer owes you money. They make regular interest payments and pay back the face value at a later date. The risk is lower than stocks. B____
Bonds
Are longer or shorter maturity bonds more sensitive to interest rate risk? Why?
Longer, b/c more time to enjoy or suffer.
Term that means to spread around one’s investment dollars among several different classes of financial assets and among the securities of many issuers; results in lowered risk.
Diversification
Are stock or bonds are better hedges against inflation? Why?
Profits accrue to stockholders, and if revenue and costs increase with inflation, then profits are hedged against inflation. But coupon payments for bonds are usually fixed.
Are options with longer maturities worth more or less, all else equal? Why?
More, because there's greater upside potential but limited downside risk.