Investment Basics

Front

Why is compound interest more advantageous than simple interest?

Back

In compound interest, you earn interest on not only your principal, but also on the interest you’ve already made.

Front

Rule of 72: How many years to double my money if I get a 9% return on investment?

Back

8 years

Front

When you buy a stock, you are buying a small piece of _______ in a company.

Back

ownership

Front

The Rule of 72 is used to find how long it will take for: investments to double, debt to double, interest to increase.

Back

investments to double

Front

Why do companies issue stocks?

Back

To raise money for economic investment

Front

What is an IPO?

Back

Initial Public Offering

Front

The chance of loss.

Back

Risk

Front

Why shouldn’t Justin invest his $700 in stock for his vacation?

Back

Investing in one company’s stock is quite risky; investing your whole savings in the stock market is a bad financial move; one year probably isn’t enough time for one stock to turn $700 into a month’s vacation.

Front

Which of the following statements are true? Options: Between cash, stocks, and bonds, bonds are typically considered the riskiest., Stocks are the riskiest investments out there., Putting money into a savings account with interest is the ideal way for a young adult to invest., Historically, stocks have had far greater annual returns than cash, government bonds, and savings

Back

Historically, stocks have had far greater annual returns than cash, government bonds, and savings

Front

What two factors should determine your risk tolerance for investing? Options: Your stocks and bonds, Your time horizon and when you will need access to the money, Your debits and credits, Your education level and ethnicity

Back

Your time horizon and when you will need access to the money