Investing

Andy bought 5 shares of a company for $10. Later, he sold all 5 shares for $15. What was his profit/loss on the stock?

• Profit of $5

• Loss of $5

• Profit of $25

• Loss of $25

A _____ is a loan given to an organization while a _______ is partial ownership in the company.

• bond, ETF

• stock, bond

• bond, stock

• ETF, bond

What is Social Security?

• Social Security is a private retirement fund run by your company

• Social Security is another name for a 401(k)

• Social Security is a government run retirement program

• Social Security is a program that matches your 401(k) contributions

If interest rates rise, what will typically happen to bond prices?

• Rise

• Fall

• Stay the same

• Interest Rates are not related to bond prices

How is a bond fund different from an individual bond?

• A bond fund is a group of bonds and is considered more diversified

• A bond fund always gives you a higher interest rate than an individual bond

• A bond is issued by the government. A bond fund is issued by a company.

• A bond fund can't be sold but an individual bond can

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

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

Why is compound interest more beneficial than simple interest?

• Your money grows faster when it is compounded

• Your taxed on simple interest, but not compound interest

• Fees for compound interest are greater than simple interest

• Compound interest is hard to calculate, so fewer use it

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

Which would be considered the highest risk investment type?

• Stock

• Mutual Fund

• Bond

• Money Market Account