Investing 101

A type of investment that invests in a lot of different companies is called

• Stocks

• Bonds

• Mutual funds

• T-bills

What is a stock?

• A loan an investor makes to a company or government that pays interest over time.

• A share of ownership in a company

• A collection of investments sold as a package.

• An option to purchase something in the future at todays price.

Spreading your investments around to inrease financial security

• Risk assessment

• Diversification

• Stocks, bonds & cash

• Liquidity trap

Ownership in a publicly traded corporation

• CD-certificate of deposit

• Money Market

• Treasury bill

• Stock

The number of years it takes for your money to double

• 72 Rules

• Rule of 72

If you bought a stock at $20 a share and now it's worth $40 a share how much do you make per share if you sell all your stock now?

• $10

• $40

• $20

• -$20

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

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

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