FINANCIAL LITERACY NOTES QUIZLET
AND MULTIPLE CHOICES.
Describe the difference between saving and investing. - Answers-Saving is when you
hold on to the money you make and investing is use money to make more money
Which is the more important measure for an investment, annual rate of return or actual
rate of return? - Answers-Annual rate
Why does inflation need to be taken into consideration when evaluating investment
returns? - Answers-Because you shouldn't invest in something that is inflated
What is risk tolerance? - Answers-your willingness to engage in financial endeavors that
have uncertain outcomes
What is an example of an investment that would require a lot of knowledge to
successfully invest in. - Answers-Big companies
Does a person with a short investment horizon have more or fewer investment options
than someone with a long investment horizon. - Answers-More
How can diversification reduce the risks of investing? - Answers-Because you know the
difference between the things you invest
What type of investments would be the least risky? - Answers-Land and real estate
How are preferred stocks different from common stocks? - Answers-Preferred stocks
are what you want and common are the ones other people want
What is the difference between stocks and bonds? Which is considered safer? Why? -
Answers-Many investors consider bonds safer investments than stocks because
bondholders are likely to receive their initial investment back once the bond matures.
How can a person invest in real estate without buying land, a house, or a building? -
Answers-They can be a contributor to the building or home so when someone buys it
they get a cut of the money.
Does using margin to buy an investment increase or decrease your risk? - Answers-A
margin account increases purchasing power and allows investors to use someone
else's money to increase financial leverage.
What is a mutual fund? - Answers-A mutual fund is a professionally managed
investment fund that pools money from many investors to purchase securities.
AND MULTIPLE CHOICES.
Describe the difference between saving and investing. - Answers-Saving is when you
hold on to the money you make and investing is use money to make more money
Which is the more important measure for an investment, annual rate of return or actual
rate of return? - Answers-Annual rate
Why does inflation need to be taken into consideration when evaluating investment
returns? - Answers-Because you shouldn't invest in something that is inflated
What is risk tolerance? - Answers-your willingness to engage in financial endeavors that
have uncertain outcomes
What is an example of an investment that would require a lot of knowledge to
successfully invest in. - Answers-Big companies
Does a person with a short investment horizon have more or fewer investment options
than someone with a long investment horizon. - Answers-More
How can diversification reduce the risks of investing? - Answers-Because you know the
difference between the things you invest
What type of investments would be the least risky? - Answers-Land and real estate
How are preferred stocks different from common stocks? - Answers-Preferred stocks
are what you want and common are the ones other people want
What is the difference between stocks and bonds? Which is considered safer? Why? -
Answers-Many investors consider bonds safer investments than stocks because
bondholders are likely to receive their initial investment back once the bond matures.
How can a person invest in real estate without buying land, a house, or a building? -
Answers-They can be a contributor to the building or home so when someone buys it
they get a cut of the money.
Does using margin to buy an investment increase or decrease your risk? - Answers-A
margin account increases purchasing power and allows investors to use someone
else's money to increase financial leverage.
What is a mutual fund? - Answers-A mutual fund is a professionally managed
investment fund that pools money from many investors to purchase securities.
