Investments Chapter 2

Which statement is true about liquidity?

• The more liquid an investment, the more return.

• The less liquid the investment, the less the return.

• The more liquid and investment, the less return.

• Both A and B

A reason that people need to save and invest is to:

• Let their money to make money.

• Increase the supply of money

• Be able to get anything they want.

• Have an opportunity to talk with financial service providers.

A benefit of diversification in your investment is:

• Reduced risk
• Increased return
• Reduced tax liability
• Increased risk

Money markets are great for your emergency fund due to their liquidity and stability.

• True
• False

A mutual fund portfolio that is properly diversified will have all investment dollars located in just one type of investment category.

• True

• False

You can start investing with a small amount of money.

• True
• False

Single stocks and mutual funds carry the same amount of risk.

• True
• False

You should start investing as soon as you have your college education funded.

• True
• False

Saving and investing have nothing to do with the amount of money you make.

• True
• False

Quality of an investment that permits it to be converted quickly into cash without loss of value; availability of money.

• risk
• liquidity