Ch. 6 & 7 Review Investing & Retirement

Front

What is investing?

Back

Investing is the act of allocating resources, usually money, in order to generate income or profit. It involves purchasing assets like stocks, bonds, or real estate with the expectation that they will increase in value over time.

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What is a retirement plan?

Back

A retirement plan is a financial arrangement designed to replace income when an individual is no longer earning a regular paycheck. It often includes savings accounts, pensions, and investment accounts.

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What is the typical age range for retirement plan withdrawals?

Back

Most retirement plans require withdrawals to begin between ages 60-70.

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What is an investment portfolio?

Back

An investment portfolio is a collection of financial assets such as stocks, bonds, and cash equivalents held by an individual or institution.

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What does 'level of risk' mean in investing?

Back

The level of risk refers to the potential for losing money on an investment. Higher risk investments may offer higher returns but also come with a greater chance of loss.

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What is liquidity in the context of investments?

Back

Liquidity is the ease with which an asset can be converted into cash without affecting its market price. Cash is considered the most liquid asset.

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What is inflation?

Back

Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power.

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What is the rate of return?

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The rate of return is the gain or loss made on an investment relative to the amount invested, usually expressed as a percentage.

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What is diversification in investing?

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Diversification is the practice of spreading investments across various financial assets to reduce risk.

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What is a stock?

Back

A stock represents ownership in a company and constitutes a claim on part of the company’s assets and earnings.