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
