Chapter 9 lesson 2 review (HS)

What does a stock represent in a company?

• A loan to the company

• Part ownership or equity

• A fixed interest rate

• A guarantee of profit

What is a Bull Market?

• When the market experiences a prolonged decline

• When the market is unpredictable

• When stock values rise by 20% on average

• When stock values drop by 20% on average

What is the main function of a Stock Market Index?

• To sell stocks directly to investors

• To guarantee returns on investments

• To measure a section of the stock market

• To predict the future value of stocks

Which type of investment has a high risk but also a potential for high return?

• Certificates of deposit (CDs)

• Money Market Accounts

• Fixed Annuities

• Single Stocks

What characterizes a Bear Market?

• Investors enter the market in large numbers

• Stock values rise by 20% on average

• Economic confidence is at its peak

• Stock values drop by 20% on average

What is the risk level of investing in Bonds?

• High

• Moderate

• Low

• Variable

What does investing in a Mutual Fund involve?

• Buying a fixed interest rate

• Lending money to a company

• Guaranteeing a return on investment

• Pooling money from investors to buy assets

What is a key benefit of Fixed Annuities?

• High risk and high return

• Ownership in a company

• Direct investment in the stock market

• Guaranteed rates of interest

Why might investing in single stocks be considered a bad idea?

• Because of the high risk of losing money

• Because the return is always high

• Because they have low risk

• Because they offer guaranteed returns

What should you never do according to the text?

• Invest in anything you don't understand

• Talk with an investing professional

• Follow a consistent investing strategy

• Invest in mutual funds