Investing and Types of Investments

What are certificates of deposit?

• Shares in a company

• Loans to the federal government

• Bonds issued by the US government

• Lump sum of money deposited in a bank for a specified period of time

What are savings bonds?

• Shares in a company

• Lump sum of money deposited in a bank for a specified period of time

• Loans to the federal government

• Bonds issued by the US government

What are Treasury bills, Treasury notes, and Treasury bonds?

• Shares in a company

• Lump sum of money deposited in a bank for a specified period of time

• Loans to the federal government

• Bonds sold to you by the US government and will be paid on a later date

What are municipal bonds?

• Loans to the federal government

• Shares in a company

• Bonds issued by the US government

• Bonds issued by states, cities, and counties

What are corporate bonds?

• Loans to the federal government

• Bonds issued by the US government

• Bonds issued by states, cities, and counties

• Bonds issued by corporation

What is common stock?

• Bonds issued by the US government

• Shares in a company bought for capital gains

• Loans to the federal government

• Shares in a company bought for income

What is preferred stock?

• Shares in a company bought for capital gains

• Bonds issued by the US government

• Loans to the federal government

• Shares in a company bought for income

What is the Dow Jones Industrial Average?

• An index that tracks the stock prices of 30 selected companies

• An index that tracks the stock prices of 500 selected companies

• An index that tracks the stock prices of 2,000 selected companies

• An index that tracks the stock prices of all companies

What is dollar cost averaging?

• Investing a large amount of money in one company

• Timing purchases based on market conditions

• Investing in mutual funds

• Investing a fixed amount of money regardless of market conditions

Why is diversification important in investing?

• To maximize returns

• To minimize risk

• To invest in different types of assets

• To invest in different countries