Financial Literacy Exam 4 questions
well answered
investing - ANS ✔✔involves a reasonable amount of risk
speculative risk - ANS ✔✔begins when an investor aims for returns well above market averages;
refers to assets that have wildly unpredictable outcomes
stocks and bonds
commodities
options
precious metals
collectibles - ANS ✔✔types of speculative risks
inflation risk
interest rate risk
business failure risk
market risk
global investment risk - ANS ✔✔five investment risk factors
inflation risk - ANS ✔✔cost of goods rise faster than your return
interest rate risk - ANS ✔✔assets with a fixed rate payment fall in value
,business failure risk - ANS ✔✔stocks and bonds can lose value if the business is not properly
managed
market risk - ANS ✔✔market conditions can prevent growth and profits
global investment risk - ANS ✔✔when investing in foreign assets, currency conversion can affect
your overall return
conservative risk tolerance - ANS ✔✔investors would rather earn a small amount of interest if it
means keeping risks low and the initial investment intact
moderate risk tolerance - ANS ✔✔will accept some risk in order to achieve better returns
aggressive risk tolerance - ANS ✔✔investors are willing to take large risks in hopes of earning
large returns
asset allocation - ANS ✔✔an investment strategy that aims to balance risk and reward by
adjusting the percentage of each asset in a portfolio
principal - ANS ✔✔the money you invest
investment income - ANS ✔✔interest payment and dividends collected while owning an
investment and any capital gains collected upon the sale of the investment asset
capital gain - ANS ✔✔the increase in value of an asset
capital loss - ANS ✔✔the decrease in value of an asset
, stocks - ANS ✔✔indicates ownership in a company and represents a claim on a portion of the
assets; represented in shares
bonds - ANS ✔✔- a form of debt that you can purchase, where you act as the lender to a
corporation or government
- graded according to risk level
- the higher the risk of default, the higher the interest rate
paid semi-annually
fixed amount based on the stated rate of the bond at issuance - ANS ✔✔interest payments on
bonds
real estate - ANS ✔✔- can provide a steady stream of income
- more time-intensive for the investor
- incur expenses
annuities - ANS ✔✔a stream of payments paid to purchasers of an annuity
period certain annuity - ANS ✔✔paid for a term of years, which may or may not exceed the
lifetime of the investor
life annuity - ANS ✔✔paid as long as the investor lives
stocks
bonds
money market or cash equivalents
real estate or other tangible assets - ANS ✔✔four classes of assets
well answered
investing - ANS ✔✔involves a reasonable amount of risk
speculative risk - ANS ✔✔begins when an investor aims for returns well above market averages;
refers to assets that have wildly unpredictable outcomes
stocks and bonds
commodities
options
precious metals
collectibles - ANS ✔✔types of speculative risks
inflation risk
interest rate risk
business failure risk
market risk
global investment risk - ANS ✔✔five investment risk factors
inflation risk - ANS ✔✔cost of goods rise faster than your return
interest rate risk - ANS ✔✔assets with a fixed rate payment fall in value
,business failure risk - ANS ✔✔stocks and bonds can lose value if the business is not properly
managed
market risk - ANS ✔✔market conditions can prevent growth and profits
global investment risk - ANS ✔✔when investing in foreign assets, currency conversion can affect
your overall return
conservative risk tolerance - ANS ✔✔investors would rather earn a small amount of interest if it
means keeping risks low and the initial investment intact
moderate risk tolerance - ANS ✔✔will accept some risk in order to achieve better returns
aggressive risk tolerance - ANS ✔✔investors are willing to take large risks in hopes of earning
large returns
asset allocation - ANS ✔✔an investment strategy that aims to balance risk and reward by
adjusting the percentage of each asset in a portfolio
principal - ANS ✔✔the money you invest
investment income - ANS ✔✔interest payment and dividends collected while owning an
investment and any capital gains collected upon the sale of the investment asset
capital gain - ANS ✔✔the increase in value of an asset
capital loss - ANS ✔✔the decrease in value of an asset
, stocks - ANS ✔✔indicates ownership in a company and represents a claim on a portion of the
assets; represented in shares
bonds - ANS ✔✔- a form of debt that you can purchase, where you act as the lender to a
corporation or government
- graded according to risk level
- the higher the risk of default, the higher the interest rate
paid semi-annually
fixed amount based on the stated rate of the bond at issuance - ANS ✔✔interest payments on
bonds
real estate - ANS ✔✔- can provide a steady stream of income
- more time-intensive for the investor
- incur expenses
annuities - ANS ✔✔a stream of payments paid to purchasers of an annuity
period certain annuity - ANS ✔✔paid for a term of years, which may or may not exceed the
lifetime of the investor
life annuity - ANS ✔✔paid as long as the investor lives
stocks
bonds
money market or cash equivalents
real estate or other tangible assets - ANS ✔✔four classes of assets
