No-Frills Money Skills: Episode 3—Get into Stocks

What is a stock?

A stock is a share of ownership in a publicly traded company.

Diversification offers all of the following benefits, except

Guarantees a positive return on your financial investments.

How can a company raise money to grow?

It can issue an IPO.

What is meant by the statement, "the higher the risk, the higher the potential reward?

The potential for reward is greater with a riskier financial investment because prices are volatile, meaning they can decrease greatly or they can increase greatly.

Capital gain means

The price of a financial asset increased between the time it was purchased and the time it was sold.

Which of the following financial investments would be considered most risky?

a. Cash (no) b. Certificates of Deposit (no) c. Corporate bonds(no) d. Stocks (yes)

Which of the following financial investments would be considered most risky?

commodities

Each of the following is a benefit of issuing stock to grow a business except

giving up shares of ownership