FA-5.4-5.6: Investing Review

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What are high grade bonds?

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Bonds with high credit ratings and lower risks of default, usually issued by stable companies.

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What are real estate investment trusts (REITs)?

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Companies that own, operate, or finance income-generating real estate.

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What are high yield bonds?

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Bonds with lower credit ratings and a greater chance of default, often issued by startups or struggling businesses.

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What is a bull market?

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A market condition where stock prices are rising and the economy is booming.

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What is a bear market?

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A market condition where stock prices are declining and the economy is receding.

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What is the significance of market trends in investing?

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Market trends help investors make informed decisions about when to buy or sell assets.

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What does it mean to time the market?

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Attempting to predict future market movements to buy low and sell high.

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Why is timing the market difficult?

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Trends are hard to predict, making it challenging to accurately time investments.

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What is asset allocation?

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The process of dividing investments among different asset categories, such as stocks, bonds, and cash.

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What are large cap stocks?

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Stocks of companies with a large market capitalization, typically over $10 billion.