AFA Unit 6 Vocab Review Part 1

Front

A loan to an organization is a _____; partial ownership is a _______.

Back

bond, stock

Front

Primary reason for a company to issue stock?

Back

To raise money to grow the company.

Front

Jonathan earns 2% on an investment, inflation is 3%. What happens to his purchasing power?

Back

It's decreasing.

Front

Highest risk investment type?

Back

Individual Company Stock

Front

Main appeal of an index fund?

Back

Typically low cost and diversified investments.

Front

Account for buying/selling stocks, bonds, and funds:

Back

Brokerage Account

Front

Significant downside of most target date funds (TDFs):

Back

High fees / expense ratios

Front

Benefit of a target date fund (TDF):

Back

TDFs adjust asset allocation automatically based on retirement year.

Front

Investing regularly instead of timing the market is called...

Back

Dollar cost averaging

Front

Not a good reason to buy an index fund:

Back

You want to "beat the market" with your ROI.