Investment and Interest Flashcard

Front

How does investing in the stock market differ from putting money in a savings account at a bank?

Back

Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies

Front

Which statement is TRUE about compound interest?

Back

Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned.

Front

What kinds of behaviors can PREVENT people from making smart investing decisions?

Back

Exiting the market because that’s what everyone else is doing

Front

Difference between an individual bond and a bond fund?

Back

A bond is considered to be a less diversified investment than a bond fund.

Front

Which of the following statements about Exchange Traded Funds (ETFs) is TRUE?

• ETFs are traded once a day after the market closes
• An ETF is a single stock that you can buy in the stock market
• Actively managed ETFs have very low fees
• ETF prices can change throughout the day as they are exchanged on the market

Back

ETF prices can change throughout the day as they are exchanged on the market

Front

You bought 10 shares of stock in StreamingVideoCo for $45 per share. Two months later you sold the 10 shares of stock for $80 per share. What was your profit or loss on StreamingVideoCo stock?

Back

Profit of $350

Front

Which of the statements below BEST describes the relationship between risk and return when considering an investment?

Back

Investors expect to earn a higher return when they invest in a high risk asset

Front

Why is diversification a recommended investment strategy?

Back

Diversifying your portfolio helps reduce risk

Front

Which of the following is a characteristic of dollar-cost averaging?

Back

Dollar-cost averaging is a way to decrease your risk

Front

How is a bond different from a stock?

Back

A bond is a loan you give to an organization while a stock is partial ownership in a company