Investing Review

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You may not be able to get advice from a human financial advisor when you want it

A disadvantage of using a robo-adviser might be that...

One factor is the company's individual performance, and another factor is how investors feel about the company.

Describe two factors that can influence an individual company's stock price.

Is managed by a fund manager who charges a fee

An actively managed mutual fund...

They receive dividends from the company they bought the stock of and/or they sell the stock at a higher price than what they bought it for.

How can someone make money from investing in a stock?

You have the opportunity to make more money when you invest compared to what you can earn putting your money in a savings account.

How does investing in the stock market differ from putting money in a savings account at a bank?

A bond is a loan you give to an organization while a stock is partial ownership in the company.

How is a bond different from a stock?

Pick individual stocks to see if she can beat the market

Nancy is a beginner level investor and is eager to get started. All of the following are things she should do EXCEPT...

No, because it's too risky for a beginner investor who doesn't have the knowledge and experience to pick good stocks.

Should you try to pick individual stocks to "Beat the Market"?

how much money do I need to save to comfortably retire? What's my risk-tolerance?

What are 2 questions you should ask when getting ready to invest?

ETFs are a type of index fund that trades on exchanges. Yes, their prices fluctuate throughout the day.

What are ETFs? Do their prices change throughout the day?

The price of a stock would rise and fall because of supply and demand. So if more people want to buy a stock then the price increases and vice versa.

What could cause the price of a stock to rise and fall?

To sell a stock when it's high (day trading).

What does it mean to 'beat the market'?

To own stock means to own a piece of a company or a share.

What does it mean to own stock? What do you own?

Rate of Return is the net gain or loss on an investment over a period of time.

What is Rate of Return?

It's a type of account used to buy and sell stocks, bonds, and mutual funds.

What is a brokerage account used for?

A robo-advisor is a digital platform that provides investment services through an algorithm. The benefits are they have generally lower fees and they're more accessible for the average person, but you don't get the personal advice of an actual human advisor.

What is a robo-advisor? What are the benefits/costs?

Diversification lowers the risk for the investor by spreading their money across different types of investments.

What is diversification and how does it benefit an investor

Actively managed mutual fund

What type of investment is managed by an investment professional seeking to "beat the market" through good stock picking? This type of investment also typically carries higher fees which may make it difficult for it to "beat the market."

BitCoin is a form of digital currency that is not exchanged through a central bank.

What's Bitcoin?

Unforeseen company events can have a dramatic impact on the stock price for a company

When investing in individual stocks, you should expect that...

Bond

Which investment is an IOU issued by a company that makes a regular coupon payment to investors?

Investing in an S&P 500 index fund

Which of the following investment choices best reflects a diversified portfolio?

Investors generally expect to earn higher returns from stocks compared to bonds

Which of the following statements is TRUE about stocks and bonds?

Investors expect to earn a higher return when they invest in a high risk asset like stock in a small company

Which of the statements below BEST describes the relationship between risk and return when considering an investment?

Investors have their buy and sell orders of company stocks matched electronically by the various stock markets throughout the trading day

Which of the statements below is TRUE about stock markets?

Diversifying your portfolio helps reduce risk.

Why is diversification a recommended investment strategy?

You should tailor your investment portfolio so that it assumes an amount of risk you are comfortable with.

Why is it important for you to understand YOUR risk tolerance before you start investing?

It's important because the sooner you start saving, the more money you'll have when you retire.

Why is it important to start saving for retirement when young?

So the company can raise the money they need to grow and expand their business.

Why would a company choose to issue stock?

Gain of $350

You bought 10 shares of stock in StreamingVideoCo for $45 per share. Two months later you sold the 10 shares of stock for $80 per share. What was your profit or loss on StreamingVideoCo stock?

$700

You purchase 100 shares of Pasta Den for $45/share. One year later, you sell the shares for $52/share. What was your TOTAL GAIN for your investment in Pasta Den?


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