FINANCE final exam study guide 1

How are active investing and passive investing different?

Active investing is typically done by a fund manager trying to beat the market while passive investing typically involves investing in a popular index like the s&p 500

WHat is a bond?

An investment in which you loan money to a corporation or government and are paid back with interest and the principal that you originally lent to them.

Tracie is new to investing and is going to use an app that offers trades with zero fees. After opening her account, Tracie should first

Conduct research on the investments she interested in

Daniel has saved 2,000 in a savings account that earns .5 percent interest annually. What will most likely happen to the purchasing power of his savings over time?

His purchasing power will DECREASE because the interest rate is lower than the historical rate of inflation.

Which of the following is true about pension plans?

How much an employee gets from a pension spends on how long they worked for the employer and how much they earn

Which of the following is true about investing?

It can help grow your money through the power of compounding

Sanjana is explaining what social security is to her younger brother. Which of the folllowing descriptions should she use?

Social security is a government program that pools contributions from currently workers to then provide retirement support benefits to those who are eligible.

which of the following is true, based on the historic returns of the s&p 500?

The stock market fluctuates in thre short term and is diffuclt to predict. It has an average annual return of 6-7 percent, adjusted for inflation

All of the following are advantages of saving for retirement in a 401k except..

You can withcdraw money at any time without paying a penalty

A commonly used strategy to minimize investing risk is

diversifying across asset classes and within each asset class