Investing Part I: Vocabulary & Concept Review

Traders and investors differ in their approach to time frames and decision-making.

• Traders focus on short-term gains, while investors focus on long-term growth.

• Traders and investors both focus on short-term gains.

• Traders focus on long-term growth, while investors focus on short-term gains.

• Traders and investors both focus on long-term growth.

A bull market is characterized by:

• Falling stock prices and investor pessimism

• Rising stock prices and investor optimism

• Government intervention in the stock market

• A stock market crash

True or False: The rate of return is the percentage of money gained or lost on an investment over time.

• True

• False

• -15%

• -20%

• -25%

• -30%

True or False: Inflation reduces the purchasing power of money over time.

• T

• F

• 15%

• 25%

• 30%

• 35%

Why is inflation a concern when saving money?

• Inflation reduces the purchasing power of money over time.

• Inflation increases the value of money saved.

• Inflation has no effect on savings.

• Inflation guarantees higher interest rates on savings.

True or False: A shareholder is someone who owns shares of a company's stock.

• True

• False

The New York Stock Exchange (NYSE) is an example of:

• A private investment club

• A company that sells only bonds

• A stock exchange where investors buy and sell stocks

• A government-run financial institution

The main advantage of investing over saving is:

• Higher potential returns

• Lower risk

• More liquidity

• Tax benefits