Financial Literacy/Education Flashcards
(26 cards)
What is the primary goal of investing?
To grow wealth over time.
True or False: A higher risk typically leads to higher potential returns in investments.
True.
Fill in the blank: The process of allocating resources, usually money, to generate income or profit is called ______.
investing.
What is diversification in the context of investments?
The practice of spreading investments across various financial assets to reduce risk.
Which of the following is considered a fixed-income investment? A) Stocks B) Bonds C) Real Estate
B) Bonds.
What does ROI stand for?
Return on Investment.
True or False: Mutual funds allow investors to pool their money to invest in a diversified portfolio.
True.
What is the difference between primary and secondary markets?
The primary market is where new securities are issued, while the secondary market is where existing securities are traded.
What is an index fund?
A type of mutual fund that aims to replicate the performance of a specific market index.
Fill in the blank: ______ is the practice of buying and holding investments for a long period, regardless of market fluctuations.
Buy and hold.
What is the significance of the time value of money?
It states that money available today is worth more than the same amount in the future due to its earning potential.
What is a stock?
A share in the ownership of a company.
True or False: A bear market is characterized by rising stock prices.
False.
What is asset allocation?
The process of dividing investments among different asset categories, such as stocks, bonds, and cash.
Which investment is typically more volatile: A) Bonds B) Stocks
B) Stocks.
What does the term ‘liquidity’ refer to in finance?
The ease with which an asset can be converted into cash.
Fill in the blank: The ______ is the amount of money an investor earns from an investment, expressed as a percentage of the initial investment.
return.
What is a dividend?
A portion of a company’s earnings distributed to shareholders.
True or False: Real estate is considered a tangible asset.
True.
What is the purpose of a financial plan?
To outline an individual’s financial goals and the strategies to achieve them.
What does the term ‘market capitalization’ refer to?
The total market value of a company’s outstanding shares of stock.
Which of the following is NOT a type of investment? A) Stocks B) Bonds C) Insurance
C) Insurance.
Fill in the blank: ______ risk is the possibility of losing some or all of an investment’s value.
Investment.
What is a capital gain?
The profit from the sale of an asset when its selling price exceeds its purchase price.
