Personal Finance: Investing
what kinds of behaviors can PREVENT people from making smart investing decisions?
Exiting the market because that's what everyone else is doing
Why is diversification a recommended investment strategy
Diversifying your portfolio helps reduce risk
What is one question an investor should ask when deciding whether or not they would like to open a Roth IRA or a Traditional IRA
Do I want to pay taxes now or later
Which of the following statement about Exchange Traded Funds (ETFs) is TRUE
ETF prices can change throughout the day as they are exchanged on the market
Sam is 22, just started his first full-time job, and is selecting his investment through hid company's 401(k) plan. Why might a target date fund (TDF) be a good option for Sam
A TDF will automatically adjust his asset allocation based on the retirement year he has chosen
How is a bond different from a stock
A bond is a loan you give to an organization while a stock is partial ownership in a company
Which of the following accurately describes a difference between an individual bond compared to a bond fund
A bond is considered to be 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, but also on the interest you've already earned
Katrina works for Penny's Pickles, which offers a 401(k) match for up to 3% of her salary, which is $65,000 per year. In her budget, she only has $150 per month available to save for retirement. What should she do
Contribute the full $150/mo to the 401(k) because her company will match that full amount, "doubling" her investment every month
Daniel has saved $2,000 in a savings account that earns 0.5% interest annually. what will most likely happen to the purchasing power of his saving over time
His purchasing power will DECREASE because the interest rate is lower than the historical rate of inflation
How does investing in the stock market differ from putting money in a savings account at a bank
Investing allows you to accumulate wealth for retirement while saving is best for short term purchases or emergencies
Which of the statements below best describes the relationship between risk and return when considering an investment
Investors expect to earn a higher return when they invest in high risk assets
An actively managed mutual fund
Is managed by a fun manager who charges a fee
What is a brokerage account used for
It's a type of account used to buy and sell stocks,bond,and funds
Geraldo reviews his brokerage statement and sees the following two mutual fund investments that he made a year ago. ActiveFund20 has an average return (before fees) of 7.0% per year and an annual fee of 1%. PassiveFund500 had an average return for Geraldo (net of fees)
PassiveFund500: It had an overall return of 6.4% while ActiveFunds20 had an overall return of 6.0%
Nancy is new to investing and is eager to get started. All of the following are thing she should do EXCEPT
Pick individual stocks to see if she can beat the market
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?
Profit of $350
Sanjana is explaining what social is to her younger brother. Which of the following descriptions she she use
Social Security is a government program that pools contributions from current workers to fund retirement support benefits to those who are eligible
How can someone make money from investing in a stock
THey receive dividends or they sell the stock at a higher price than what they brought it for
You buy a bond with a fixed coupon rate of 5%. A year later, similar bonds that are issued have a coupon rate of 3%. Which of the following is TRUE
The price of your bond will increase
Why are Index Funds such a popular investing option
They provide a low-cost, diversified investment option that closely matches the overall return of a given index, such as the S&P 500
As a shareholder in a public company, what are the benefits available to you
You may receive dividends from the company, if the company pays them, and you have ownership of a portion of the company
WHy is it important for you to understand your risk tolerance before you start investing
You should tailor your investment portfolio so that it assumes an amount of risk you are comfortable with
A disadvantage of using a robo-adviser might be that
you may not be able to get advice from a human financial advisor when you want it