Investing
Which of the following most accurately describes what a bond is?
A bond is an investment in which an investor lends money to a corporation or government and it must be paid back with interest.
Which of the following correctly orders investment options from lowest to highest risk?
A government bond, an index fund tracking the S&P 500, an ETF tracking the technology sector, an individual stock
What is one difference between actively managed mutual funds and index funds?
Actively managed mutual funds typically have higher fees than index funds do
What is one example of a service offered by a brokerage?
Allowing customers to buy/sell stocks
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.
Capital gains taxes
Are taxed differently depending on if you sell them before or after holding them for 12 months
Which of the following should you do when taking your rate of return into account?
Assume a conservative rate of return so that you can plan the worst but hope for the best.
. Exchange-traded funds...
Can be traded throughout the day
How do exchange traded funds (ETFs) differ from actively managed mutual funds?
ETFs can be traded throughout the day while actively managed mutual funds cannot
Daniel has saved $2,000 in a savings account that earns 0.5% 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
A fund that tries to match the returns of a specific market or market section.
Index Fund
All of the following are common investing strategies EXCEPT
New York Stock Exchange
Which of the following is a characteristic of a brokerage account?
No penalties for withdrawing your money
What is loss aversion?
Our tendency to fear losses more than we enjoy gains.
A fund that adjusts its portfolio over time, based on when you plan to retire.
Target Date Funds (TDF)
Eli is planning ahead for retirement. They should consider all of the following factors when determining how much they'll need in retirement EXCEPT...
The current balance in their checking account
Juan buys a bond with a fixed coupon rate of 3%. Six months later, similar bonds that are issued have a coupon rate of 4%. Which of the following is TRUE?
The price of Juan's bond will decrease
When it comes to fees, micro-investing apps are beneficial because:
They have relatively low fees until you reach a $5,000 balance
Your investor profile is a snapshot of what kind of investor you are and takes into account:
Your time horizon and risk tolerance