Personal Finance Unit 3 Stocks

WHAT DOES A STOCK REPRESENT?

A percentage of ownership of a company including assets and profits

WHAT IS A MUTUAL FUND?

A pool of securities you can buy as an investment

WHAT IS AN INDEX ETF?

An ETF that tracks a stock index, like the S&P 500

WHO WOULD BE THE MOST LIKELY TO BUY AN INVERSE ETF?

An investor who normally is not able to short-sell in their portfolio

WHO WOULD BE THE LEAST LIKELY TO BUY A LEVERAGED ETF?

An investor who thinks the underlying index will slowly go up or down

WHAT MAKES UP A "TICKER SYMBOL" IN THE UNITED STATES?

Between 1 and 5 letters only

WHICH OF THESE IS DIFFERENT BETWEEN ETFS AND MUTUAL FUNDS?

ETFs usually have lower fees than mutual funds

WHAT IS A DANGER OF OVER-DIVERSIFICATION?

If your investments are spread thin, it is hard to beat the market

WHY WOULD YOU WANT TO DIVERSIFY BETWEEN SECTORS?

In case a sector-wide event causes all stocks to drop

WHICH IS A CHARACTERISTIC OF OPEN-ENDED MUTUAL FUNDS?

Investors typically hold fractions of shares

WHY DID INVESTORS START USING TICKER SYMBOLS?

It was faster to move news using telegraphs with short names

HOW DO YOU BUY ETFS?

Like a stock, with the price constantly updating

WHAT IS A DISADVANTAGE OF MUTUAL FUNDS?

Mutual Funds can have maintenance fees regardless of fund performances

WHAT IS ONE DIFFERENCE BETWEEN MUTUAL FUNDS AND ETFS? Mutual Funds can hold more than just stocks

Mutual Funds cannot be day-traded

WHAT IS A GOOD WAY TO STAY DIVERSIFIED?

Re-balance your portfolio every 3 months

WHAT IS PREFERRED STOCK?

Stock that gets paid dividends first

OVER THE LAST 30 YEARS OR SO, WHICH INVESTMENT PRODUCED THE HIGHEST PERCENTAGE RETURNS?

Stocks

OVER THE LAST 90 YEARS, WHICH INVESTMENT PRODUCED THE MOST VOLATILE RETURNS?

Stocks

WHAT DOES A STOCK QUOTE REPRESENT?

The last price a seller and buyer agreed to to make a trade

WHICH OF THESE ITEMS CAN YOU FIND IN A STOCK QUOTE?

The stock's current daily volume

WHAT IS "NET CHANGE"?

The total amount a stock's price has changed since the previous trading day

WHY WOULD A STOCK HAVE A ".A" AT THE END OF ITS TICKER SYMBOL?

There are multiple classes of stock for this company

WHAT DOES IT MEAN TO "DIVERSIFY" YOUR PORTFOLIO?

To hold more than 1 stock, For your stocks to not be all in the same area of the economy

WHAT IS CAPITAL PRESERVATION?

To make sure you don't lose your initial investment

WHAT IS AN IPO?

When a company first sells shares of stock to the public

WHICH IS ONE MAJOR ADVANTAGE OF MUTUAL FUNDS?

You have a fund manager so you do not need to constantly monitor your investments