Investing/Retirement Flashcard3

Front

What is a brokerage account primarily used for?

Back

Trading assets such as stocks, bonds, mutual funds.

Front

What is compound interest?

Back

Compound interest is money earned on money and interest earned previously.

Tags

CCSS.7.RP.A.3

Front

What is the main difference between a stock and a bond?

Back

Stock represents ownership in a company, while a bond is a debt investment usually associated with a government or corporation.

Front

How do you become a part-owner of a company when investing in individual stocks?

Back

By purchasing shares.

Front

Which financial instrument has interest paid to the lender before the principal is paid in full?

Back

Bonds.

Front

What is the primary purpose of investing in stocks?

Back

To gain ownership in a company and potentially earn dividends and capital gains.

Front

What is a mutual fund?

Back

A mutual fund is an investment vehicle that pools money from multiple investors to purchase a diversified portfolio of stocks, bonds, or other securities.

Front

What does diversification mean in investing?

Back

Diversification is the practice of spreading investments across various financial instruments, industries, and other categories to reduce risk.

Front

What is the risk-return tradeoff?

Back

The risk-return tradeoff is the principle that potential return rises with an increase in risk.

Front

What is a retirement account?

Back

A retirement account is a financial account that is specifically designed for saving and investing for retirement, often with tax advantages.