New PFLE unit 2 Flash card review

Liam and Maya are discussing their investment strategies. What is the primary benefit of having a diversified investment portfolio?

• It guarantees high returns.

• It reduces risk by spreading investments across various assets.

• It focuses on a single asset class for maximum growth.

• It eliminates all investment risks.

Rohan and Arjun are discussing their investment strategies. What is a potential downside of investing in stocks that they should consider?

• Too safe

• No potential for growth

• Market volatility

Michael and Evelyn are discussing their savings options. What is a common feature of a certificate of deposit (CD) that they should consider?

• High liquidity with no penalties for early withdrawal.

• Fixed interest rate for a specified term.

• Variable interest rate based on market conditions.

• Unlimited check-writing privileges.

Elijah and Ava are discussing stocks. Elijah says, "Ava, I heard that this stock is really volatile!" What does he mean?

• It pays high dividends.

• Its price does not change.

• It has a stable market.

• Its price can change rapidly in a short period.

Imagine you're in a finance class with Anika, Benjamin, and Mia. The teacher asks: Which of these typically offers the highest returns?

• Savings account

• Bonds

• Checking account

• Stocks

Arjun and Sophia are discussing the stock market. Can you help them figure out what the term "bull market" refers to?

• A market in decline.

• A market showing sustained increase in stock prices.

• A market dominated by bearish investors.

• A market where stocks are traded for animals.

Avery and Abigail are discussing financial terms. Can you help them out? What term describes individuals who do not have an account with a bank or similar financial institution?

• Underbanked

• Financially excluded

• Unbanked

• Credit-challenged

Hey there, future investors! Oliver and Anika are curious: What exactly is a stock?

• A Loan to a company

• Ownership share in a company

• A Government-issued security

• A type of savings account

Imagine you're a financial wizard like Rohan or Ava! What does the magical term 'diversification' mean in the world of investments?

• Investing in one company

• Spreading investments across assets

• Selling all investments

• Borrowing money to invest

Which typically has fixed interest payments?

• Stocks

• Bonds

• Mutual funds

• Real estate