Bonds!
What is a Bond
An investment, A IOU, Evidence that you loaned money and need to get paid back, A loan to the government/company
What is a mutual fund?
A collective investment pooling money from investors
What is a stock?
A share of ownership in a company
A major drop in medical prices is likely to impact which type of stocks most significantly?
Tech, Energy, Health or Financial
Health
A stock’s current price is $40 per share. If you bought 8 shares, how much would you have invested?
$3200
What is the maturity date of a bond?
The date by which the bond must be repaid in full
What does diversification in mutual funds help to achieve?
Lower the risk
What is the purpose of buying stocks?
To make a return on investment, or to make money
A major drop in oil prices is likely to impact which type of stocks most significantly?
Tech, Energy, Health or Financial
Energy
You invested in a stock at $60 per share, buying 12 shares. If the price drops to $45, what is your total loss?
Loss of $1980
Why are government bonds considered safe investments?
Governments rarely go bankrupt
Who typically manages a mutual fund?
Financial professionals
What is an Initial Public Offering (IPO)?
A company's first sale of stock to the public
What is the likely impact of a company announcing higher-than-expected quarterly profits?
Stock prices may rise
You bought 25 shares at $12 each. To break even, at what price would you need to sell each share?
$12
What is the primary risk associated with high-yield bonds?
They may lose all value if the issuer fails
What is one potential disadvantage of mutual funds?
Management fees can lower returns, Not directly in charge of your own stocks
What are dividends?
Payments made to shareholders from company profits
What base factor can drive the price of a stock up?
An increase in demand
You bought 30 shares of a stock at $25 per share. After a price increase to $35, you decide to sell 10 shares. How much profit did you make from the shares you sold?
Gained $150
Why would the US Government sell a Bond
They want to build a new jet and need to borrow money
What happens if a fund manager makes poor investment choices?
The fund may underperform, leading to lower returns, you will loose money
Why might a company pay dividends?
To encourage shareholders to hold their stock
How can investor sentiment (Feelings) impact stock prices?
It can cause stock prices to rise or fall based on optimism or pessimism
You short-sell 10 shares of a stock priced at $40. If the stock price drops to $30, what is your profit?
Gained $100