Personal finance Chapter - 3
you buy with a fixed coupon rate is 5%. a year later, simlar bond that are issued have a coupon rat of 3%. what is true
the price of your bond will increase
What are two factors that can influence an individual company's stock price?
1. supply and demand 2. stock splits 3. upcoming events
Sam target date fund
A TDF will automatically adjust has asset allocation baised on the retirment you he chooses
Roth IRA vs. traditional IRA
Do i want to pay taxes now or later?
EFT exchange tarad and funds
EFT prices can change daily
How is a bond different then a stock?
a bond is a loan you give to an organization and stock is partial ownership of a company
Difference between individual bond and bond fund?
a bond is considered to be a less diversified investment than a bond fund
Which of the following statements is true about compound interest?
compound interest allows you to earn interest not only on the amount you have saved and earned
Why is diversification a recommended investment strategy?
diversifying your portfolio helps reduce risk
what is a charistic of dollar cost averaging?
dollar cost averaging is a to decrease your risk
What kinds of behavior can prevent people from making smart investment?
exiting the market because that is what everyone elas is doing
risk vs. return discribe
expect high risk with a high return
Sanjana explains
government program pules controbution from workers to fund retirement
Nancy wants to invest what should not pick?
individual stocks to try and beat the market
How does investing in the market differ form putting money in a savings account at a bank?
investing money is for retirement while saving is best for short-terms purchase
An actively managed mutual fund is?
managed by a fund manager and charges a fee
what are the three differences between index funds and mutual funds
management style, investment objective and cost
What is a disadvantage of using robo adviser?
no advise for a human when you might need it
active fund 20 and passive fund 500
passive funds 500: it had an overall return of 6.4% while active fund 20 has 6%
Bought 10 shares / $45 dollars 2 months later sold at 10 shares / $80 per share what is the profit
profit is $350
HOw can someone make money investing in a stock?
receive divadance, sell stocks at a higher price
shairhloder ina public company. what are the benefits?
receives divadance that the company pays them and, has partial ownership
penny pickles , 401(K) match matches up to 3% can only save $150 per month. What should she do?
she should contribute the full $150
Danial has saved 2000 in a savings account that earns .5% interest annually. What will most likely happen when the purchase power of his savings over time?
the purchasing rate will decrease becasue the intrest rate in lower then the historical rate of inflation
explain why it is important to save for retirement when you are young even though it is many years away?
the sooner you start saving the more money you will ahve and you will be able to take more risks
why are index funds such a popular investing option?
they provide a low cost, closely matches overall return of the given investment
What is a brokerage account used for?
used to buy and sell stock, bods, and funds
Why is it important for you to understand your risk tolerance before you start investing?
you should taler your investment portfolio so that is assumes an amount of risk you are comfortable with