WorksheetsChapter 7 - Flash Cards for Test 12/11
Total questions: 19
Worksheet time: 10mins
What is the primary risk of investing in the stock market?
The interest rate might decrease
The value of stocks may decrease, leading to potential losses
The bank might close
The stock market does not operate on weekends
Which is the most likely impact of decreased interest rates?
Consumers can borrow easier and the price of real estate will increase
The cost of borrowing is more expensive and bond prices tend to decrease
The cost of borrowing is more expensive and the price of real estate will increase
Consumers can borrow easier and the price of existing bonds decreases
What is diversification in the context of investing?
Investing all your money in a single stock.
Spreading your investments across various assets to reduce risk.
Focusing on stocks from a single industry.
Buying and selling stocks frequently.
Which investment is generally considered to be a safer investment, but typically offers lower returns?
Cryptocurrency
Stocks
Foreign exchange market
Bonds
What is a stock?
A stock is a type of investment that uses money from investors to purchase many different investment types.
A stock is an insured bank account with high risk.
A stock is a lending investment to the government or a company.
A stock is a share of ownership in a company.
When evaluating a professional for investment expertise, what is an important criteria to consider?
Celebrity status
Qualifications
Personality
Number of followers
Which of the following statements is true regarding automated investing?
New investors are required to use automated investing
Automated investing is the only way to invest without paying fees
Automated investing can help investors save time
Automated investing provides nominal returns
________ are loans to a company or government for a set amount of time. They are considered low-risk investments.
Stocks
Bonds
Mutual funds
Deposits
What characteristics do mutual funds and exchange-traded funds (ETFs) share?
Mutual funds and exchange-traded funds don’t require you to have a certain minimum amount of money before you can buy into the fund
Mutual funds and exchange-traded funds are only good investments for older investors
Mutual funds and exchange-traded funds require a minimum amount of money to be invested
Mutual funds and exchange-traded funds can be a lower cost way to diversify your investments
Which among the following is considered the safest investement?
Mutual Funds
Equities
Real estate
Bank Deposits
This type of behavioral bias impacts investment decisions in that losses have a bigger emotional impact than gains, and investors avoid them as much as possible.
Loss aversion
Anchoring behavior
Mental accounting
Home bias
What does it mean if a stock is described as "volatile"?
It pays high dividends.
Its price does not change.
It has a stable market.
Its price can change rapidly in a short period.
Why might someone rent a home when they would prefer to buy one?
Because they want unrestricted freedom in changing their home
Because they enjoy do-it-yourself home repairs
Because there is a much higher initial cost to buy a house than rent one
Because they want the stability that comes with renting
This type of investment, primarily used for retirement savings, begins with riskier types of assets and shifts to lower risk investments the closer an investor gets to retirement:
Government bonds
Growth stock
Cryptocurrency
Target date funds
Which is true about bonds?
Bonds pay a variable rate of interest, depending on their face value and term
Bonds have no risk. Both government and corporate bonds guarantee a return
Long-term bonds typically earn a higher return than short-term bonds
Bonds represent ownership in a company and are sold as shares
Which is true about risk in investing?
Riskier investments have the potential for higher return which can influence the level of risk an investor is willing to take
Historically, all individual stocks outperform the overall stock market, if they are given enough time
When weighing risk and return, the past performance of an investment consistently predicts future performance
Investors who select riskier investments for higher returns always do so with the understanding that they could lose more than they make
Which of the following can be bought and sold on a stock exchange, and can often come with built-in diversification?
Bonds
Options
ETFs
Stocks
Which of the following is a drawback of utilizing fintech tools?
Fintech requires the latest technology to work
There is no regulatory oversight
You have to have a lot of money to use fintech
Limited customer support and human interaction
