Unit 3: Investing

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

What kinds of behaviors can PREVENT people from making smart investing decisions? Exiting the market because that’s what everyone else is doing

Back

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

Front

Which of the following accurately describes a difference between an individual bond compared to a bond fund? A bond is issued by a company while bond funds only invest in government bonds, A bond guarantees you a higher rate of return than a bond fund, A bond pays you dividends while a bond fund pays you regular interest, A bond is considered to be a less diversified investment than a bond fund

Back

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

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? Investors expect to earn a lower return when they invest in a high risk asset, Investors expect to earn a higher return when they invest in a low risk asset, Investors expect to earn a higher return when they invest in a high risk asset, Investors expect to earn zero return when investing in a low risk asset

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

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.

Front

An actively managed mutual fund…

Back

Is managed by a fund manager who charges a fee

Front

How can someone make money from investing in a stock?

Back

They receive dividends or they sell the stock at a higher price than what they bought it for.

Front

What is a brokerage account used for?

Back

It’s a type of account used to buy and sell stocks, bonds, and funds.