Financial Literacy Flashcard

Front

If Daniel invests $1,000 in a savings account that offers compound interest, what does this mean for his investment?

Back

Interest on the $1,000 and also on the interest it earns over time

Front

What does the principle refer to in the context of Oliver taking a loan to buy a new car?

Back

The initial amount of money Oliver borrows for his car before any interest is added

Front

What is the Rule of 72?

Back

A method to estimate how long it takes for your money to double at a certain interest rate.

Front

What is a bear market?

Back

When the stock market is down and people are pessimistic

Front

What does diversification in investing mean?

Back

Spreading your money across different types of investments to reduce risk

Front

What is the NYSE?

Back

A big place where people buy and sell stocks and other investments

Front

What does a stockholder own in a company?

Back

A slice of the company by owning its stock

Front

Imagine Grace has invested in the stock market. What is the risk associated with her investment?

Back

The chance that her investment might lose value or not perform as expected

Front

What does the Rate of Return indicate?

Back

How much money you make or lose on an investment, shown as a percentage of what you put in

Front

What are Mutual Funds?

Back

A bunch of investments like stocks and bonds grouped together, managed by pros, and sold as one package.