Economics Quiz Study Guide Part 3

What are bonds?

• • - A LOAN designed to raise money for companies/governments

  • - Investors lend Money in exchange for interest

• - Bonds are a type of chemical reaction.

  - Bonds are a form of currency used in ancient civilizations.

Why are stocks issued?

• - Stocks are issued to decrease company ownership.

  - Stocks are issued to reduce company profits.

  - Stocks are issued to increase company liabilities.

• - Owners sell fractional ownership in the company

  - Investors pay money to buy part of the company

Stock:

• Share of Company Ownership

• Person who owns stock

Mutual Funds Advantages:

• - Mutual funds have no risks

  - Mutual funds provide diversification, professional management, liquidity, convenience, and potential for higher returns.

• - Reduces risk

  - Saves Time

Portfolio Diversification

• - Portfolio diversification involves putting all investments in a single asset class.

  - Portfolio diversification is a strategy that focuses on investing in only one type of asset.

• - What? Spreading money across a range of investment

  - Why? Reduces Risk

Mutual Funds:

• Mutual funds guarantee a fixed return on investment...

• Combination of Investments from diverse areas...

• Mutual funds are only available to institutional investors...

• Mutual funds are a type of savings account...

• - Stocks

  - Bonds

  - Real Estate

  - Speculative Investments

Full-Service Brokerage firms:

• - Full-Service Brokerage firms are only suitable for experienced investors.

  - Full-Service Brokerage firms do not provide any financial advice.

  - Full-Service Brokerage firms only offer stock trading services.

• - Buys & sells stock

  - Acts as financial advisor

  - More Expensive

Discount Brokerage firms:

• Discount brokerage firms offer high-cost trading services with investment advice.
• Discount brokerage firms provide free investment advice to all clients.
• Discount brokerage firms do not offer any trading services.
• Only completes orders to buy and sell stock.

stockholder

• Person who owns stock

• Share of company ownership

Brokerage firms:

• - Help people buy stock

  - Vital before, now can trade online through online brokerage firms

• - Brokerage firms are retail stores that sell clothing and accessories.

  - Brokerage firms are companies that specialize in landscaping services.

  - Brokerage firms are government agencies that regulate food safety standards.