Stocks
What is a stock?
A stock represents ownership in a company and constitutes a claim on part of the company’s assets and earnings.
What is a bond?
A bond is a fixed-income investment representing a loan made by an investor to a borrower, typically corporate or governmental.
What is the primary benefit of investing in a Certificate of Deposit?
The primary benefit of investing in a CD is the higher interest rate compared to regular savings accounts.
What is a savings account, and how does it work?
A savings account is a deposit account held at a bank or credit union that earns interest over time.
What is a mutual fund?
A mutual fund is an investment vehicle that pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities.
What is a dividend?
A dividend is a portion of a company’s earnings that is paid to shareholders, typically on a quarterly basis.
What is the difference between a bond’s coupon rate and its yield to maturity
The coupon rate is the annual interest rate paid by the bond issuer based on the bond’s face value
What happens if you withdraw money from a CD before its maturity date?
Withdrawing money from a CD before its maturity date typically incurs an early withdrawal penalty.
What are the main benefits of having a savings account?
The main benefits of a savings account include safety (funds are insured by the FDIC or NCUA), liquidity (easy access to funds), and earning interest on deposits.
What are the advantages of investing in mutual funds?
The advantages of investing in mutual funds include diversification (spreading risk across various assets),
What is the difference between a bull market and a bear market?
A bull market is characterized by rising stock prices and investor optimism, while a bear market is marked by falling stock prices and investor pessimism.
What factors can affect bond prices?
Bond prices can be affected by changes in interest rates, credit ratings of the issuer, inflation expectations, and overall economic conditions. Generally, when interest rates rise, bond prices fall, and vice versa.
Are CDs insured, and if so, by whom?
Yes, CDs are insured. In the United States, they are insured by the Federal Deposit Insurance Corporation (FDIC) for banks and by the National Credit Union Administration (NCUA) for credit unions, up to $250,000 per depositor, per institution.
Are there any limitations on withdrawals from a savings account?
Yes, federal regulations previously limited certain types of withdrawals and transfers from savings accounts to six per month.
How do mutual funds generate returns for investors?
Mutual funds generate returns through dividends from stocks, interest from bonds, and capital gains from selling securities at a higher price than they were purchased.
What does it mean to short a stock?
Shorting a stock involves borrowing shares and selling them with the intention of buying them back later at a lower price. It is a strategy used when an investor believes the stock price will decline.
What is a callable bond?
A callable bond is a bond that can be redeemed by the issuer before its maturity date at a specified call price.
What factors should you consider when choosing a CD?
When choosing a CD, consider the interest rate, term length, minimum deposit requirement, early withdrawal penalties, and whether the institution is FDIC or NCUA insured.
How is interest calculated on a savings account?
Interest on a savings account is typically calculated daily based on the account balance and paid monthly.
What are the different types of mutual funds?
There are several types of mutual funds, including equity funds (investing in stocks),
What is a stock split?
A stock split occurs when a company increases the number of its outstanding shares by issuing more shares to current shareholders.
What is the difference between investment-grade bonds and junk bonds?
Investment-grade bonds are issued by entities with high credit ratings, indicating a low risk of default.
Can you add more money to a CD after it has been opened?
Typically, you cannot add more money to a traditional CD once it has been opened. You would need to open a new CD for additional deposits.
What factors should you consider when choosing a savings account?
When choosing a savings account, consider the interest rate, fees (such as maintenance or withdrawal fees), minimum balance requirements, accessibility (online and branch access), and whether the account is insured by the FDIC or NCUA.
What fees are associated with mutual funds?
Mutual funds may charge various fees, such as management fees (for professional management)