Common Stocks
What do you receive as a shareholder of common stocks?
Dividends and voting rights.
What is a key feature of preferred stocks that attracts investors?
Fixed dividends.
What do you receive regularly when you invest in bonds?
Interest payments.
What do mutual funds pool together?
Money from many investors.
What type of income can real estate investments generate?
Rental income.
Why are common stocks considered riskier than other investments?
Their prices can fluctuate due to company performance, economic changes, and market conditions.
How do preferred stocks compare to common stocks in terms of price stability?
Preferred stocks are more stable and less volatile than common stocks.
Why are bonds considered safer than stocks?
They are less affected by market fluctuations.
How are mutual funds managed?
They are managed by professional fund managers.
What is one of the main challenges of investing in real estate?
It requires a large initial investment.
What is one example of a company that has provided significant returns through common stocks?
Nvidia.
When do preferred stockholders receive their dividends compared to common stockholders?
Preferred stockholders receive their dividends before common stockholders.
What happens to the value of existing bonds when interest rates rise?
The value of existing bonds typically falls.
What is one disadvantage of mutual funds related to management fees?
Management fees can reduce overall returns, especially in actively managed funds.
How can local economic conditions affect real estate investments?
They can influence property values and rental income.
How does the potential for growth in common stocks compare to preferred stocks?
Common stocks have a higher potential for growth than preferred stocks.
How do changes in interest rates affect the value of preferred stocks?
When interest rates rise, the value of preferred stocks tends to fall.
What type of bonds are considered very low-risk investments?
Government bonds from stable countries.
How do mutual funds provide diversification?
By investing in a variety of stocks, bonds, and other securities.
What is one benefit of real estate as a physical asset?
It has tangible value, providing a solid asset.
Why might an investor choose common stocks over bonds?
They might choose common stocks for their higher growth potential despite the increased risk.
Why might preferred stocks be less appealing during times of rising interest rates?
Because their value decreases as interest rates increase, making them less attractive.
Why might bonds be a good choice for conservative investors?
They provide steady, reliable income and prioritize capital preservation over high returns.
Why might investors choose mutual funds if they lack time or knowledge?
Because mutual funds offer professional management and diversification without requiring daily oversight.
Why might real estate not be suitable for investors needing quick access to cash?
Because it can be difficult to sell property quickly in emergencies.