Stocks
What is a stock?
A financial asset that gives its buyer partial ownership in a corporation
What is a bond?
A loan to a business or to the government
The precious metal that people often invest in when they are worried about the economy is
Gold
Pension
What is the term for the amount of money made from an investment?
Return
What is the name of the type of income defined as when a company gives some of its profits to its stockholders?
Dividends
What is the benefit of buying a bond?
Fill in the blank: Bitcoin, Ethereum, and Dogecoin are all examples of ________.
cryptocurrencies
What is the name of the formula used to calculate how much money you should save for retirement?
4% rule
What is the term for a bond that has a C or D rating?
junk bond
According to our notes, what is the average annual return on investments?
6-10%
Why do businesses and the government issue bonds?
They need to borrow money to expand or to provide services to their customers/residents.
What is the name of the professionally-managed investment that pools the money of investors and uses it to purchase a variety of different types of investments?
Mutual fund
What is the name of the retirement fund offered by some employers?
401(k) plan
What is the general term for investing money in a variety of different investment options?
Diversification
What is the name of the type of income received if you sell a stock at a higher price than you paid for it?
capital gains income
What does a AAA rating on a bond mean?
The issuer is trustworthy, so it is very likely that they will repay all of the money you loaned them.
The type of mutual fund that buys investments from companies that are associated with a particular group like the Dow Jones or S&P 500 is known as an _____.
index fund
What do the letters "IRA" stand for?
Individual Retirement Account/Arrangement
What is the riskiest (or most volatile) type of investment?
cryptocurrency
What is the name of the government agency that regulates stock sales and purchases?
the SEC (Securities and Exchange Commission)
Why would someone buy a junk bond?
The financial asset that is like a mutual fund, but is traded like a stock is called an _______.
ETF (exchange-traded fund)
What is the primary difference between a traditional IRA and a Roth IRA?
The money you with draw from an IRA is tax-free.
What is the name of the type of account that you need to open when you're ready to start investing for your personal needs (NOT retirement)?
a BROKERAGE account