chapter 8 Flashcards
Piece of ownership in a company, mutual fund or other investment
share
A retirement plan found in nonprofit organizations such as churches, hospitals and schools.
403(b)
To ensure that some of your retirement savings will not be subject to income tax upon withdrawal, you would contribute to:
a roth IRA
Employee benefits packages:
Are non-wage compensations provided to employees in addition to their normal wages or salaries
Savings accounts and money-market accounts are most appropriate for:
Emergency funds and short-term goals
Company Xʹs board of directors has decided to issue a portion of its earnings to its shareholders. If you own stock in Company X, you can expect to receive a(n)
dividend
The benefit of diversification in your investments is
reduced risk
Long-term investments, properly diversified, include the following mutual funds:
Growth, growth and income, international, aggressive growth
Quality of an asset that permits it to be converted quickly into cash without loss of value; availability of money
liquidity
Single stocks and mutual funds carry the same amount of risk.(t/f)
false
Federal agency responsible for collecting taxes and for the interpretation and enforcement of the Internal Revenue Code
internal revenue service
Securities that represent part ownership or equity in a corporation
stocks
A savings account sold by an insurance company, designed to provide payments to the holder at specified intervals, usually after retirement
annuity
A young investor willing to take moderate risk for above-average growth would be most interested in:
mutual funds
A list of your investments
portfolio
A savings plan operated by a state or educational institution designed to help families set aside funds for future college costs
529 plan
A reason that people need to save and invest is to:
Enable their money to make money
Which of the following is a good investment option?
mutual funds
You can start investing with a small amount of money.(t/f)
true
In some cases, employers will match the employee contribution, but you should fund your plan whether your company matches or not. This statement refers to:
401(k)
You should start investing as soon as you have your college education funded.(t/f)
true
The purpose of war bonds is to finance military operations during war time. The last time the United States issued war bonds was during the Vietnam War(t/f)
false
Money markets are great for your emergency fund due to their liquidity and stability.(t/f)
true
The government agency responsible for regulating the stock market
Securities Exchange Commission
When buying and selling investments, you should not
Switch your investment strategy often, based on market conditions
If you leave a job and have money saved in your employer’s retirement plan, always roll that money into an IRA using a direct rollover, which allows you to avoid taxes and penalties(t/f)
true
Relationship of substantial reward compared to the amount of risk taken
risk-return ratio
Good investment portfolios are extremely complex.(t/f)
false
Saving and investing have nothing to do with the amount of money you make.(t/f)
true
Which of the following statements about the stock market is false?
Formed in 1792, the New York Stock Exchange (NYSE) is the smallest organized stock exchange in the United States.
A mutual fund portfolio that is properly diversified will have all investment dollars located in just one of four different classes of financial assets(t/f)
false
If you get into financial trouble, borrowing against your retirement plan is a good option.(t/f)
false
Money that is invested, either tax deferred or tax free, within a retirement plan
tax favored dollars
Distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders
dividend
Which statement is false about liquidity
- The more liquid an investment, the more return
- The less liquid the investment, the less return
