W!SE Test Prep INVESTING FLASHCARD (Part 1)

Front

What is the primary goal of investing?

Back

To get your money working for you

Front

Which of the following is NOT a way to make money through investing? Earning interest, Receiving dividends, Capital gains, Winning the lottery

Back

Winning the lottery

Front

What does ROI stand for?

Back

Return On Investment

Front

What is compound interest?

Back

Interest earned on both the original investment and previous interest

Front

How does the frequency of compounding affect the growth of an investment?

Back

Increases growth

Front

What is the Rule of 72 used for?

Back

Determining how long it takes for an investment to double

Front

What does liquidity refer to in terms of savings and investments?

Back

The ability to convert to cash quickly

Front

What is a major difference between savings and investments?

Back

Savings prioritize ease of access over growth.

Front

What kind of risk might you face if a company you invested in goes bankrupt?

Back

Credit risk

Front

What should your investment decisions be based on?

Back

Your risk tolerance