Principles Review - Investing, Accounting, Ethics

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

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

True or False: Investing in a diversified portfolio of stocks guarantees you will not lose money.

• True

• False

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.

What is the primary reason for a company to issue stock?

• The stocks help investors earn a higher rate of return

• To raise money to grow the company

• To distribute the risk of bankruptcy across more investors

• To increase greater awareness of the company

This is where your orders to buy or sell stock are sent and carried out

• Stock Exchange

• Brokerage Firm

• Stock Meeting Place

• Money Exchange

All of the following are ways to earn money as a stockholder EXCEPT:

• getting dividends

• selling the stock at a higher value

• stock splits

• selling the stock at a lower value

Spreading your investments around to inrease financial security

• Risk assessment

• Diversification

• Stocks, bonds & cash

• Liquidity trap

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