How is risk related to return?
The higher the ____ you are willing to take, the greater your possible return will be.
risk
Name a type of investment risk.
Possible answers: inflation risk, industry risk, political risk, market risk, nonmarket risk, company risk
Two tax advantages of investing are : Tax _____ and tax-______
deferrals : exemptions
a performance measured used to evaluate the efficiency of an investment
return on investment (ROI)
Risk free investment example:
anything issued by the government (US government savings bonds or Treasury secretaries)
Interested is calculated and _____ to the initial principal amount.
Added
How is investing like gambling?
They are both based on chance.
People with higher income may choose tax-exempt investments because their tax rates are (high or low)
high
a postponement of taxes to be paid
tax deferral
You invest in the oil industry but lose money. You took an ______ risk
Industry
a ________ is a portion of a corporation's profits distributed to stockholders.
dividend
______ risk is the chance that activities or events that affect a company will change the value of an investment
company
US Treasury secretaries are (exempt or deferred) from taxes
exempt
the potential for change in the value of an investment
investment risk
An increase of the decrease in taxes or the passing of a new law can affect the value of investments. You took a ____ risk.
Political
The principal should get (larger or smaller) overtime.
Larger
______ risk is the chance that actions taken by the government will affect the value of your investment
Political
If an investment is tax free, the investor keeps (all or some) of the interest earned.
all
a debt instrument that is issued by a corporation or government
bond
When earthquakes and uncontrollable events affect your investment, this was a ________ risk.
Nonmarket
You want the cost of investing to be (low or high) and the rate of return to be (low or high)
low: high
______ risk is the chance that the rate of inflation will rise faster than your investment may lose value
Inflation
If the investor keeps 65% of the investment earned. The tax is (deferred or exempt)
deferred
When an investment is not subject to taxation it is tax-______.
tax exempt
A farmer buys seeds to make profit every season. This is ________ investing.
systematic