Investing vs. Savings
Stocks, bonds, and funds are examples of?
What are investments?
This type of investment represents partial ownership in a company and allows you to share in its profits.
What is a stock?
Two common types of bonds
Government & Corporate Bonds
Which is a riskier investment? Stocks or Bonds
Stocks
Which is a riskier investment? Corporate or Government Bonds?
Corporate Bonds
This type of account is best for short-term goals or emergencies, while investing is better for long-term wealth accumulation.
What is a Savings Account?
“AAPL” is an example of this, used to identify a company’s stock.
What is a ticker symbol?
A bond represents this type of financial agreement.
What is a loan to a company or government?
Nancy wants to start investing. Which of the following should she NOT do: pick individual stocks to try to beat the market, invest in low-cost index funds, or invest in a diversified portfolio?
Pick individual stocks to try to beat the market
The stage in life when a person stops working full-time and lives off income or savings.
What is retirement?
This action allows money to grow faster over time due to the compounding effect.
What is Compound Interest?
A period when stock prices are rising and the economy is strong.
What is a Bull Market?
A mix of stocks and bonds is called this
A mutual fund
A government program that pools contributions from current workers to fund retirement support benefits to those who are eligible.
What is social security?
A period of time when stock prices are falling and investor confidence is low.
What is a bear market?
Investing in the stock market differs from putting money in a bank because it can potentially earn higher returns, but also carries more _________
What is risk?
Investors can make money from stocks in two ways: selling the stock at a higher price or receiving _______
What are dividends?
If a bond has a fixed 5% coupon rate and new bonds are issued at 3%, what happens to the demand for your bond?
It increases
The recommended strategy of spreading investments across different assets to reduce risk.
What is diversification?
This type of account provides a platform for purchasing and selling stocks, bonds, and mutual funds.
What is a Brokerage Account?
A primary benefit companies receive from selling stocks
To raise money to grow or improve their business
A company does this when it divides its shares into more shares but keeps the total value the same.
What is a stock split?
An actively managed mutual fund is different from a passively managed fund because it ____
Is managed by a fund manager who charges a fee
What are two methods of investing that involve diversification?
A risk of investing in bonds
The company or government might not pay back the money they borrowed