Investing

Question 1

Since 1993 the FTSE All-World Index has delivered returns on average of ___ but it is important to understand that they have rarely delivered anything like that in 1 year.

In 2022 for example, they delivered a ___ whereas in 2021 they delivered a ___.

Answer 1

• 9.3%
• 7.3% loss
• 20% gain.

Question 2

What is the main difference between ETFs and mutual funds?

Answer 2

ETFs trade like shares on stock exchanges throughout the day and have two prices that are shown on the stock exchange

Whereas with mutual funds it is the fund provider who prices the fund and creates or redeems fund units to meet client demand.

Question 3

When trading ETFs on the stock exchange, what are the 2 prices shown throughout the day and what is the difference between them called?

Answer 3

• An ask price (the price you buy an ETF for)
• and a bid price (the price you sell the ETF for).
• The difference between the two is called the ‘bid-ask spread’.

Question 4

Timing the market - how the best trading days can often occur during a downturn and vice versa.

Since 1980, __ of the __ best trading days occurred in years with negative returns.

Answer 4

• 12 of the 20 best

Question 5

Shares have historically been more ___ in the short term (meaning they have fluctuated in price more sharply than other investments such as bonds or cash), but they’ve delivered ___ inflation-adjusted returns over the long term

Answer 5

• volatile
• higher