Stocks
A ____________ (bull/bear) market is when more investors are buying stocks, which causes stock values to increase. A ____________ (bull/bear) market is when investors are selling stocks, which causes stock values to decrease. Fill in the blanks.
Bull / Bear
The higher the risk associated with a bond, the ______ (more/less) likely a corporation might default on paying the investor. Interest rates for riskier bonds tend to be ______ (higher/lower) so that investors are ______ (more/less) willing to take on that risk.
More / Higher / More
Which type of fund can be bought and sold on the stock market, just like individual stocks.
a. Mutual Fund
b. TDF
c. ETF
d. Index Fund
ETF (Exchange Traded Fund)
If someone can only invest a small amount of money into their 401k a month, they should NOT bother investing in it at all. True or False?
False! Even investing a small amount into a 401k can make a huge difference 40 years in the future.
What is the shape of a stop sign?
Octagon
Investing is meant for long-term goals (10+ years or so)
Trading is meant for quick, short-term profits and gains
Which type of bond is riskier/makes more money? Company bonds or Government bonds?
Company bonds
Explain diversification.
Diversification is investing across different asset classes (stocks, bonds, funds, etc.). Spreading your money across many different companies and investment types.
What is a 401k plan?
A benefit that helps employees of a company invest for retirement.
What does www stand for?
World Wide Web
How can someone make money from investing in a stock? (2 things)
2. Selling at a higher price
You buy a bond with a fixed coupon rate of 5%. A year later, similar bonds that are issued have a coupon rate of 8%. Will the price of your bond increase, decrease or stay the same?
The price of your bond will decrease since similar bonds are being sold at a higher interest rate.
What is the main difference between a Mutual Fund and Passive Index Fund?
A mutual fund is actively managed by a fund manager while an index fund tracks a certain index (list of companies)
How can you invest for retirement if your employer does not offer a 401(k) plan?
Open an individual retirement account (IRA).
Describe what occurs during a stock split and why companies may use this strategy.
An action where a company increases the number of shares outstanding and lowers the individual value of each share. This makes the stock more affordable to investors and thus, more people will want to buy it.
Describe what an individual bond is.
A bond is an investment in which an investor lends money to a single corporation or government with the expectation that it will be paid back with interest.
What is the main benefit of investing into funds?
Diversification
What does it mean when someone says “Good investing is boring”?
You’re better off making long-term investments that don’t require day-to-day management.
In which sport is the term “love” used to mean zero?
Tennis
As a shareholder in a public company, what are the rights available to you? (3 things)
2. Ownership of a portion of the company
3. Voting on company decisions
Describe what a bond fund is.
A bond fund invests in a collection of different types of bonds and provides more diversification.
Describe what a TDF is used for and how it works.
Used to invest for retirement.
This fund adjusts its asset allocation and risk level over time based on a specific retirement goal date. Riskier early on, conservative later on.
What is one question an investor should ask when deciding whether or not they would like to open a Roth IRA or a Traditional IRA?
Do I want to pay taxes now or later?
What is Mr Hicks' favorite animal?
A Cow