Investment Strategies and Concepts

What is the general relationship between risk and return in investing?

• The higher the return, the higher the risk involved.

• There is no relationship between risk and return.

• Higher risk guarantees higher returns.

• Lower risk always leads to higher returns.

What traits are more important than IQ when it comes to investing?

• Business sense, discipline, emotional control, and knowing one’s own limits.

• High intelligence and analytical skills.

• Networking abilities and charm.

• Luck and timing in the market.

What type of investor seeks lower-risk investments?

• An investor focused on maximizing gains regardless of risk.

• An investor who prioritizes safety and a satisfactory return, not necessarily the highest gains.

• An investor who only invests in high-risk stocks for potential high returns.

• An investor who avoids all forms of investment to prevent any loss.

Name two employer-sponsored retirement plans.

• 401(k) and 403(b).

• IRA and Roth IRA.

• Health Savings Account and Flexible Spending Account.

• Pension Plan and Annuity.

Name four common types of investments.

• Real estate, commodities, options, and futures

• Stocks, bonds, mutual funds/ETFs, and cryptocurrency

• Savings accounts, certificates of deposit, and treasury bills

• Peer-to-peer lending, crowdfunding, and art investments

What is a bond?

• A type of stock that represents ownership in a company.

• A debt investment where the investor lends money to a company or government.

• A financial instrument that tracks the performance of a commodity.

• A savings account that earns interest over time.

What are annuities and retirement accounts generally used for?

• Short-term investments and savings

• Long-term savings and retirement planning.

• Immediate cash flow needs

• Speculative trading in stocks

What does diversification do for a portfolio?

• Increases potential returns by concentrating investments in a single industry.

• Reduces risk and volatility by spreading investments across different securities and industries.

• Eliminates all risks associated with investing in the stock market.

• Guarantees a profit regardless of market conditions.

What kind of investor typically seeks high-risk trades?

• Conservative investor

• Speculative investor

• Value investor

• Income investor

In a bond, who is the lender?

• The investor.

• The borrower.

• The government.

• The bank.