Investing 101
What is the difference between an investor and a trader?
Trader:
Quick, short-term gains. Pay attention to when to buys and sell.
Investor:
Longer term. Hold investments. Buy based on company's health.
What is a stock?
A stock represents the ownership of a fraction of a corporation.
Owner of the stock gets a proportion of the corporation's assets and profits equal to how much stock they own.
Units of stock are called "shares."
What is a Bond?
Loans made to a large organization government or corporation
You're essentially lending money to the government, which promises to repay you at a certain date, with interest.
What are 2 different types of funds?
Mutual funds
Money-market funds
Index funds
Exchange-traded funds
Target Date Funds
Identify this symbol:AAPL
Apple
Identify this symbol: CAKE
Cheesecake Factory
List 3 types of assets
Stocks
Bonds
Mutual Funds
Index Funds
Property
What part of a company's stock quote tells you how large of a company it is?
Market cap
What happens to the price of a bond when interest rate rises/falls?
If interest rates rise:
Bonds issued with a lower yield become less desirable to investors -> their prices fall.
If interest rates fall:
Investors seek out higher yielding bonds -> making the prices rise.
What are mutual funds?
Most Mutual Funds are actively managed by a professional
They help try to beat the market using investment strategies
They tend to have higher fees
Identify this symbol:NKE
Nike
Identify this symbol: HOG
Harley Davidson
How does the risk level of an investment effect the potential profit outcome?
Higher Risk = Higher Return
Lower Risk= Lower Return
If a stock price becomes too expensive for the average consumer to purchase what might a company do?
Institute a stock split
When a bond matures, what do recieve?
the face value plus interest payments
Why is it important to have a diverse portfolio?
Diversification helps minimize risk and maximize profits by choosing different investments and types of investments.
If you put all of your money into a single bond and it declares bankruptcy, you'll lose some if not all your funds.
Identify this symbol:AMZN
Amazon
Identify this symbol: PLAY
Dave & Busters
What is the difference between a Bull and Bear Market?
A BULL market is when the stock market is rising and the economy is booming, while a BEAR market describes a declining market and a receding economy
What does "IPO" Mean?
Initial public offering
Why do corporate companies sell bonds?
Way for companies to raise capital without having to issue shares or seek other forms of financing.
This fund is best for investors that want to build to retirement with little work
TDF
Identify this symbol:MSFT
Identify this symbol: HEAR
Turtle Beach
What is the average annual return rate for investments?
Investing:
6-10%
Comparted to
Savings:
~ 2%
What is a "Stock Ticker Symbol"
Short, capital-letter abbreviations that represent publicly traded securities on stock exchanges.
What is the risk that the company or government is unable to pay back the investor.
default risk
What is the difference between Active and Passive management in relation to stocks?
Active:
Purpose: Trying to beat the market
How? A professional portfolio manager invests in strategies he/she thinks can beat the market.
Passive:
Purpose: Match the market’s performance
How? Simply tracking the performance of a market index
Identify this symbol:TSLA
Tesla
Identify this symbol: FUN (but they have just been bought by this company: SIX)
Cedar Fair
Six Flags