T-Bills, Bonds, Stocks
Capital Gains are when a _______ is made when and investment is sold for more than it cost.
PROFIT
A portfolio is a collection of ____________ owned by a person or organization.
investments
Mutual Fund is a pool of money from many investors used to buy a _____ of stocks, bonds or other assets
MIX
Diversification is ____________ investments across different types to reduce ________.
spreading, risk
The amount of time an investor plans to hold an investment before needing the money is known as T________ H______________.
Time Horizon
Return is the money e________ OR l________ on an investment over time.
earned OR lost
Interest income: money _________ from lending money, such as through savings accounts or bonds.
EARNED
______________'s: Investment funds that are traded on stock exchanges and hold a variety of assets.
ETF's
The chance of losing money on an investment is...
RISK
How are bonds different from stocks?
A. Bonds represent ownership in a company
B. Bonds pay regular interest, while stocks offer ownership and potential dividends
C. Bonds are riskier than stocks
D. Bonds are only sold by private companies
B. Bonds pay regular interest, while stocks offer ownership and potential dividends
Short-term loans to the U.S. government that are considered very safe investments are ___________
T-Bills
How much and how quickly the price of an investment moves up and down is called V__________
Volatility
What makes exchanged traded funds (ETFs) different from mutual funds?
A. ETFs can be traded throughout the day like stocks
B. ETFs invest in only one company at a time
C. ETFs cannot be traded on stock exchanges
D. ETFs are managed by individual investors
A. ETFs can be traded throughout the day like stocks
A person’s ability or willingness to handle losses in their investments is their _______ T____________
Risk Tolerance
Why might someone with a short-term investment time horizon choose SAFER investments?
There is less time to recover from market downturns
Payments made by a company to its shareholders, usually from profits are D_____________
DIVIDENDS
Anything valuable that a person owns is an...
ASSET
An advantage of investing in mutual funds is:
A. Guaranteed profits
B. Professional management and diversification
C. High-risk exposure
D. Exemption from fees and taxes
B. Professional management and diversification
The best description for the main purpose of investing is to grow w________ over t_______ by purchasing a__________
To grow wealth over time by purchasing assets
Why would you choose to include BONDS in your portfolio?
Bonds are more STABLE and can help balance the volatility of stocks
BONDS are __________ to a company or government that pay back ________ over time.
loans, interest
The DIFFERENCE between a SHARE and a STOCK is that...
a SHARE is a unit of _________ in a company or investment fund,
while a STOCK are shares of ___________ in a company.
OWNERSHIP
Which of the following is true about both mutual funds and ETFs?
A. They both allow access to a range of investments
B. They both require investors to manage individual stock purchases
C. They both involve investing in a single company
D. They are only available through retirement accounts
A. They both allow access to a range of investments
***DAILY DOUBLE!!!!*** MATCH EACH DEFINITION WITH THE CORRECT TYPE OF RISK
Credit Risk :
Market Risk :
Interest Rate Risk :
Inflation Risk :
Business Risk:
A. The possibility that a borrower will not repay a loan or make interest payments.
B. The danger that rising prices will reduce the value of your money or investment returns.
C. The chance that a specific company will perform poorly or fail.
D. The chance that the entire market will go down, affecting most investments.
E. The risk that changes in interest rates will lower the value of your investment, especially bonds.
CREDIT RISK A. The possibility that a borrower will not repay a loan or make interest payments.
MARKET RISK D. The chance that the entire market will go down, affecting most investments.
INTEREST RATE RISK E. The risk that changes in interest rates will lower the value of your investment,
especially bonds.
INFLATION RISK B. The danger that rising prices will reduce the value of your money or investment returns.
BUSINESS RISK C. The chance that a specific company will perform poorly or fail.
How does dollar cost averaging help protect against market volatility (harshness?
A. It prevents you from ever losing money
B. It locks in a fixed return rate
C. It reduces the risk of buying all shares when prices are high
D. It allows you to trade more frequently
C. It reduces the risk of buying all shares when prices are high
If you buy a T-Bill for $950 and receive $1,000 when it matures, what is the $50 called?
A. Dividend
B. Profit margin
C. Capital gain
D. Interest
D. Interest
T/F Standard deviation shows how much the value of an investment tends to fluctuate.
T/F Preferred stockholders usually receive dividends before common stockholders.
T/F Beta measures the guaranteed return of an investment regardless of market conditions.
TRUE. Standard deviation shows how much the value of an investment tends to fluctuate.
TRUE. Preferred stockholders usually receive dividends before common stockholders.
FALSE. Beta measures the guaranteed return of an investment regardless of market conditions.
Exchange traded funds are created by:
A. Individual investors buying and selling stocks
B. Governments issuing short-term securities
C. Fund providers pooling assets and offering shares
D. Banks offering high-interest savings accounts
Which factor does not affect a person’s risk tolerance?
A. Market interest rates
B. Age
C. Personality
D. Emergency savings
C. Fund providers pooling assets and offering shares
A. Market interest rates
Higher risk usually comes with higher potential _________
C. Lower return means greater risk
D. Risk and return are not related
RETURN
Name the exchange that is one of the two main places where U.S. stocks are bought and sold
NYSE
New York Stock Exchange