Unit 3 Flashcards
A list of investments
Portfolio
Quality of an assets that permits it to be converted quickly into cash without loss of value
Liquidity
A piece of ownership in the company, mutual fund or other investments
Share
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
401k
Account or arrangement in which one would put their money for long term growth
Investments
Degree of uncertainy of return on an asset
Risk
Pool of money managed by an investment company and invested in multiple companies
Mutual Fund
Tax-deferred arrangement for individual with earned income; individual retirement arrangements
IRA
True or False: A single stock would be a good place to keep your emergency fund
False
True or False: Diversification lowers risk with investing
True
Long-term investment properly diversified include the following mutual funds
Growth, growth and income, international, aggressive growth
What is a good investment option?
Mutual Funds
Which statement is true about liquidity
The more liquid an investment, the less return
Explain why you should never invest using borrowed money
If you lose the money, you have to pay back the loan and you still don’t have money
Explain the risk return ratio
The higher the risk, the higher the return or the loss
Why do single stocks carry a high degree of risk? Why do mutual funds carry less risk?
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.
What is the Rule of 72?
A formula that shows you how long it takes for your money to double
How is the Rule of 72 calculated
Divide 72 by the annual rate of return
Is real estate a liquid investment?
No, you have to wait for the estate to sale to get your money. This could take months
When was the last war bond?
At the end of WWII
