Investing

A key difference between saving and investing is

• Saving is for everyone, investing is for the wealthy

• Your money is insured when investing, it is not in savings

• Investing has a guaranteed return, savings does not

• Saving is for emergencies & goals, investing is for long-term wealth

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Why is compound interest more beneficial than simple interest?

• Your money grows faster when it is compounded

• You earn interest on your interest

• Fees for compound interest are greater than simple interest

• Compound interest is hard to calculate, so fewer use it

Which would be considered the highest risk investment type?

• Stock

• Mutual Fund

• Bond

• Money Market Account

The relationship between risk and return can be stated as

• Higher risk indicates higher return

• Higher risk indicates lower return

• Lower risk indicates higher return

• No relationship exists between risk and return

Which is NOT a stock market index?

• New York Stock Exchange

• Dow Jones Industrial Average

• S&P 500

• Nasdaq

How can you make money on stocks?

• A capital gain

• Interest

• Dividends

• Holding the stock at least 3 years

If interest rates rise, what will typically happen to bond prices?

• Rise

• Fall

• Stay the same

Andy earned $300 on a $1000 investment. What is his current ROI (return on investment)?

• 2%

• 3%

• 30%

• 70%

What is the primary difference between index funds (IF) and actively managed funds (AMF)?

• AMF typically carry higher costs (expense ratios) than IF

• The goal of an IF is to earn a higher return than the market

• AMF try to outperform their benchmark & peer group average

• IF try to track performance of a particular index

A diversified portfolio is desirable because

• It limits investment choice

• It's a good predictor on rate of return

• It increases risk and return

• It decreases risk