Ch.10-Ch.15

Question 1

What are dividends

Answer 1

Dividends are money paid to stockholders from the corporation’s earnings.

Question 2

What are stockholders?

Answer 2

People who own shares of stock

Question 3

What is a blue chip stock?

Answer 3

A conservative and safe stock, has less growth.

Question 4

What’s an emerging stock?

Answer 4

Stocks in young, often small corporations that have higher overall risk than stocks of companies that have been successful for many years.

Question 5

What’s a mutual fund?

Answer 5

A professionally managed group of investments bought using a pool of money from many investors.

Question 6

What does it mean when you invest in real estate?

Answer 6

You are buying land and buildings on it. It’s considered a good way to combat inflation, because it usually increases in value over the years at rates equal to or higher than inflation.

Question 7

What’s a mortgage?

Answer 7

A loan to purchase real estate.

Question 8

What are precious metals?

Answer 8

Tangible metals that have known and universal value around the world.

Question 9

What are gems?

Answer 9

Gems are natural, precious stones, such as diamonds, rubies, sapphires, and emeralds.

Question 10

What’s an IRA?

Answer 10

An IRA is an individual retirement account is a retirement savings plan that allows individuals to set aside up to a specified amount each year and delay paying tax on the earnings until they begin withdrawing it at age 59 1/2.

Question 11

What’s a traditional IRA?

Answer 11

A traditional IRA allows you to deduct your contribution each year from your taxable income. It allows you to delay paying tax on that income and the earning it accumulates until you withdraw the money at retirement.

Question 12

What’s a Roth IRA?

Answer 12

A type of IRA where contributions are taxed, but earnings are not. You can pay tax on your income before you put it into the account.

Question 13

What’s a 401(k) plan?

Answer 13

A defined contribution plan for employees of companies that operate for a profit.

Question 14

What are short-term needs?

Answer 14

Expenses behind your regular monthly items. Such as emergencies, vacations, social events, repairs, or major purchases.

Question 15

What’s the difference between a scholarship and a student loan?

Answer 15

Scholarships- cash allowances awarded to students to help pay education costs (interest).

Student loans- money borrowed for your education (from the federal government).

Question 16

What’s principal?

Answer 16

The amount of money you deposit into a savings account. It is the base on which your savings will grow.

Question 17

What’s interest?

Answer 17

Interest represents earnings on principal.

Question 18

What is stage 1 of investing?

Answer 18

Put-and-take account- savings account (no fees); 3-6 month safety net; essential credit expenses and student loans

Question 19

What is the second stage of investing?

Answer 19

Initial Investing- conservative; low risk; investment saving account; 3-5% growth

Question 20

What is stage 3 of investing?

Answer 20

Systemic investing- retirement savings (deducted from pay check); more aggressive; mutual fund (7-10%); employer match

Question 21

What’s stage 4 of investing?

Answer 21

Strategic Investing- diverse portfolio; professional guidance; diverse investing

Question 22

What’s stage 5 of investing?

Answer 22

Speculative Investing- high risk; uncertain potential

Question 23

What’s risk vs. reward?

Answer 23

Low risk (conservative) equals low reward.
High risk equals high reward but potential loss.

Question 24

What’s accessibility?

Answer 24

Longer or bigger investments usually lose access to the money.