Unit 9: Financial Investing

Front

All of the following are reasons to invest EXCEPT: To minimize the impact of inflation, which causes you to lose purchasing power; To build wealth by reinvesting your returns and allowing them to compound; To earn higher average rates of return than you would in a typical savings account.

Back

To earn a consistent rate of return with lower risk than typical savings accounts.

Front

Which of the following BEST describes investing? Putting $100 per month into an FDIC-insured bank account for short term goals, Buying and selling stocks within the same day to take advantage of short-term price variation, Reducing the purchasing power of your money over time, Buying assets, like stocks, with the intention to hold them and grow your wealth over the long term.

Back

Buying assets, like stocks, with the intention to hold them and grow your wealth over the long term.

Front

An investor can best harness the power of compounding by doing all of the following EXCEPT... Making frequent trades, Starting to invest early, Reinvesting earnings, Minimizing risk

Back

Making frequent trades

Front

Which of the following statements BEST describes the stock market? Businesses listing their entire company for sale, Businesses selling partial ownership of their companies to raise capital, Investors buying stock in hopes of being hired by companies, People making donations to companies that need funding

Back

Businesses selling partial ownership of their companies to raise capital

Front

During a BULL market...

Back

More investors are buying stocks, which causes values to increase

Front

Over time the stock market has...

Back

Experienced highs and lows but increased in overall value

Front

Which of the following most accurately describes what a bond is? A bond is an investment in which an investor lends money to a corporation or government with the expectation that it will be paid back with interest.

Back

A bond is an investment in which an investor lends money to a corporation or government with the expectation that it will be paid back with interest.

Front

Bob buys a bond with a fixed coupon rate of 3%. Six months later, similar bonds that are issued have a coupon rate of 4%. What is TRUE if he chooses to sell the bond before maturity?

Back

The price of Bob's bond will decrease.

Front

One difference between bonds and bond funds is...

Back

A bond fund can help you diversify your investment portfolio

Front

When talking about investing, what does it mean when someone refers to a fund?

Back

A pool of money from shareholders that is used to invest in a collection of assets like stocks and bonds.