Unit 3 Flashcards

1
Q

A list of investments

A

Portfolio

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2
Q

Quality of an assets that permits it to be converted quickly into cash without loss of value

A

Liquidity

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3
Q

A piece of ownership in the company, mutual fund or other investments

A

Share

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4
Q

A retirement saving plan offered by a corporation to its employees; the employee contributes money from his/her gross pay, and the money grows tax deferred

A

401k

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5
Q

Account or arrangement in which one would put their money for long term growth

A

Investments

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6
Q

Degree of uncertainy of return on an asset

A

Risk

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7
Q

Pool of money managed by an investment company and invested in multiple companies

A

Mutual Fund

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8
Q

Tax-deferred arrangement for individual with earned income; individual retirement arrangements

A

IRA

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9
Q

True or False: A single stock would be a good place to keep your emergency fund

A

False

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10
Q

True or False: Diversification lowers risk with investing

A

True

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11
Q

Long-term investment properly diversified include the following mutual funds

A

Growth, growth and income, international, aggressive growth

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12
Q

What is a good investment option?

A

Mutual Funds

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13
Q

Which statement is true about liquidity

A

The more liquid an investment, the less return

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14
Q

Explain why you should never invest using borrowed money

A

If you lose the money, you have to pay back the loan and you still don’t have money

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15
Q

Explain the risk return ratio

A

The higher the risk, the higher the return or the loss

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16
Q

Why do single stocks carry a high degree of risk? Why do mutual funds carry less risk?

A

Single stocks you can lose all your money if your stock goes down. Mutual stocks you can spread your money out so you can’t lose it all in one time.

17
Q

What is the Rule of 72?

A

A formula that shows you how long it takes for your money to double

18
Q

How is the Rule of 72 calculated

A

Divide 72 by the annual rate of return

19
Q

Is real estate a liquid investment?

A

No, you have to wait for the estate to sale to get your money. This could take months

20
Q

When was the last war bond?

A

At the end of WWII