marcy's quiz
What is a brokerage account used for?
A brokerage account is a type of account that can be used to buy and sell stocks, bonds, mutual funds, exchange-traded funds (ETFs) and other securities
Your friend Jenny wants to use a robo-adviser to manage her portfolio. What does this mean?
A computer software system is going to adjust her portfolio based on her preferences.
What is one question an investor should ask before investing in a Roth IRA or a Traditional IRA?
: Do I want to pay taxes now (Roth) or later (Traditional)?
What is a vesting period?
A period over which the employee has to preform services in order to earn the right to exercise the options.
How can someone make money from investing in a stock?
Collecting dividends
What kinds of cognitive biases and behaviors can prevent people from making smart investing decisions?
Confirmation bias
Why are Index Funds such a popular investing option?
Index funds are affordable, enable diversification, and tend to generate attractive returns over time
How does investing in the stock market differ from putting money in a savings account at a bank?
Investing you are putting money in, hoping that it will increase.
Why is diversification a recommended investment strategy?
It helps to smooth out performance and minimize risk, whatever the prevailing economic circumstances.
Why is compound interest more advantageous than simple interest?
It's more difficult to calculate, so fewer people use compound interest, making more profits for those who do.
What is a disadvantage of using a robo-adviser?
Limited Flexibility
Explain why it is important to start saving for retirement in your 20s, when retirement is likely four decades in the future.
One of the biggest reasons to consider contributing to a retirement savings account in your 20s is to take advantage of the power of compounding interest
How is a bond different from a stock?
Stocks give you partial ownership in a corporation, while bonds are a loan from you to a company or government
Why are Target date funds becoming a popular option to invest in?
Target-date funds provide a simple way to save for retirement
Describe two factors that can influence an individual company's stock price.
The main factors that determine whether a share price moves up or down are supply and demand
ETF prices can change throughout the day as they are exchanged on the market.
The price of an ETF's shares will change throughout the trading day as the shares are bought and sold on the market.
Explain three key differences between index funds and mutual funds.
The three main differences are management style, investment objective and cost
What do you need to do to open a brokerage account?
Your name.,Social security number (or taxpayer identification number) Address. Telephone number. E-Mail address. Date of birth. Driver's license, passport information, or information from other government-issued identification. Employment status and occupation.
As a shareholder in a public company, what are the benefits available to you?
capital appreciation, right to receive common share dividend issue by company. voting privileges, favourable treatment of dividend and capital gains. marketability through ease of disposition and acquisition.
Why is it important for you to understand YOUR risk tolerance before you start investing?
if you take on too much risk, you might panic and sell at the wrong time.
An actively managed mutual fund is. . .
it employs a professional portfolio manager, or team of managers, to decide which underlying investments to choose for its portfolio.
What is the relationship between risk and return when considering an investment?
the higher the potential return of an investment, the higher the risk
When investing in individual stocks, you should expect that. . . ?
unforeseen company events, dramatic