Econ Investing

Question 1

A type of investment that gives people shares (a portion) of ownership in a company

Answer 1

Stocks

Question 2

Interest earned only on the original principal amount invested

Answer 2

Simple Interest

Question 3

Spreading monetary investments to various financial options in order to reduce risk

Answer 3

Diversification

Question 4

An account at a bank or credit union used to set aside money and that pays you interest

Answer 4

Savings Account

Question 5

A savings alternative in which money is left on deposit for a stated period of time to earn a specific rate of return

Answer 5

Certificate of Deposit (CD)

Question 6

A savings account with tax advantages that individuals can save and invest in long-term

Answer 6

Individual Retirement Account (IRA)

Question 7

A certificate purchased from a government or company promising to pay you a specified rate of interest during the life of the bond and to repay the principal when the bond “matures,” or comes due after a set period

Answer 7

Bonds

Question 8

When you earn interest on both the money you save and the interest you earn

Answer 8

Compound Interest

Question 9

A company that pools money from many investors and invests the money in securities such as stocks and bonds

Answer 9

Mutual Funds

Question 10

An arrangement made with an employer to pay money to an employee after retirement

Answer 10

Pension Plan