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