I HATE PERSONAL FINANCE ITS SUCKS CHEECKS BRO I HATE IT AHHHHHHHHHFGHFGHDFGDSKGDLSGJSDKGFKDSJGKDFJDGJDFIGJF

As an investor, when you purchase a ______ from a company, you are lending the company money which it promises to repay with interest by a certain date

Bonds

As ___ increases, the purchasing power of the dollar decreases, which impacts how much you can buy in goods and services

Inflation

Investors can purchase shares in an actively managed ____, which pools money from many people to buy a diversified portfolio of stocks, bonds, or other securities

Mutual Fund

For someone like sarah who prefers a hand-off approach to investing, a ____ can automatically manage her portfolio based on her risk preferences

Robo- Advisor

A retirement savings option that automatically adjusts the asset mix as your retirement date approaches is known as a ______

Target Date Fund (TDF)

Mike uses the strategy of ___ to minimize the impact of the market’s ups and downs. He invest the same amount of money at regular intervals over time.

Dollar Cost Averaging

The interest calculated on both the money you’ve invested and the accumulated interest from previous periods is known as _____

Compound Return

To reduce risk in her investment portfolio, Emily uses the strategy of ___, making sure she invests in variety of assets like stocks, bonds, funds, and more

Diversification

In a ____, employees can contribute a portion of their salary on a pre-tax basis, which is then invested for retirement savings

Traditional 401 (k) Plan

When a company makes a profit, it may choose to pay part of those profits back to its shareholders in the form a

Dividend

its when you buy stocks to eventually for more money in return for a long amount of time. Stocks, bonds, and ect.

Investing

is when you hold money for emergencies. Cash; more short term (0-5 yrs)

Saving

is when you buy and sell stocks in a short period of time

Trading

A ___ market is when more investors are buying stocks, which causes stock values to increase. A ___ market is when investors are selling stocks, which causes stock value to decrease

bull, bear

What is an advantage of using a robo- advisor to invest

It’s a lot cheaper than a real advisor. Also faster, more efficient, and can be customized to your wants and needs

Social security is a government program that pools contributions from current workers to then provide retirement support benefits to those who are eligible:

true

The longer your retirement the MORE money you need to have saved

True

Stock

An investment option that allows you to own a small piece of a company

Stock Quote

The price of stock that is listed on an exchange

Stock Split

An Action where a company increases the number of shares outstanding and lowers the individual value of each share

     The higher the risk associated with a bond, the ____ (more/less) likely a corporation might default on paying the investor. Interest rates for riskier bonds tend to be ____ (higher/lower) so that investors are _____ (more/less) willing to take on that risk.

More, higher, more

When overall interest rates rise (to 10%), the bond you already own (with 5% coupon rate) becomes _____ (more/less) valuable to potential buyers, so its price will _____ (increase/decrease).

less, decrease

When overall interest rates fall (to 2%), the bond you already own (with 5% coupon rate) becomes ________ (more/less) valuable to potential buyers, so its price will ______ (increase/decrease).

more, increase

Active Investing

when one tries to beat the market by actively buying and selling stocks; higher fees, higher risks, and has a human fund manager

Passive Investing

is buying and leaving it no matter if it increases or decreases; no human manger, lower risk, and goal is to match the market

What is one difference between an IRA and a 401 (k)

IRA is an Individual Retirement Account while 401 (k) is opened by someone’s company

Mutual Fund

Pools money from many investors ti buy a diversified portfolio of stocks, bonds, and other securities, managed by a professional for a fee

Index Fund

Aims to mirror the performance of a specific index, like the S&P 500, by holding all or most of the securities in the index

True or False?: Roth IRAs are a good option for people who have relatively lower incomes - and tax rates - compared to what they expect to have in the future.

true

Explain the benefit of starting to invest early

If you invest early and lose money, you’ll have time to make it up; you also have more times for comound interest to build and grow

how can diversification help lower your investment portfolio’s risk

if a stock loses money you’ll have other stock for it not to be very damaging

How does investing in the stock market differ from putting money in a savings account at a bank?

Investing allows you to accumulate wealth for retirement while saving is best for short-term purchases or emergencies 

Which of the following statements is TRUE about compound interest? 

   Compound interest allows you to earn interest not only on the amount you have saved, but also on the interest you've already earned

What kinds of behaviors can PREVENT people from making smart investing decisions? 

  Exiting the market because that’s what everyone else is doing  

Daniel has saved $2,000 in a savings account that earns 0.5% interest annually. What will most likely happen to the purchasing power of his savings over time? 

His purchasing power will DECREASE because the interest rate is lower than the historical rate of inflation

Which of the following accurately describes a difference between an individual bond compared to a bond fund? 

  A bond is considered to be a less diversified investment than a bond fund

You bought 10 shares of stock in StreamingVideoCo for $45 per share. Two months later you sold the 10 shares of stock for $80 per share. What was your profit or loss on StreamingVideoCo stock? (Assume that StreamingVideoCo didn't pay a dividend and that you didn't incur any trading fees during that period.)

Profit of $350

 Which of the statements below BEST describes the relationship between risk and return when considering an investment?

Investors expect to earn a higher return when they invest in a high risk asset

Why is diversification a recommended investment strategy?

Diversifying your portfolio helps reduce risk

Which of the following is a characteristic of dollar-cost averaging? 

Dollar-cost averaging is a way to decrease your risk 

How is a bond different from a stock? 

A bond is a loan you give to an organization while a stock is partial ownership in a company

 An actively managed mutual fund…

Is managed by a fund manager who charges a fee 

  How can someone make money from investing in a stock?

They receive dividends or they sell the stock at a higher price than what they bought it for

What is a brokerage account used for?

It’s a type of account used to buy and sell stocks, bonds, and funds

Why is it important for you to understand your risk tolerance before you start investing? 

You should tailor your investment portfolio so that it assumes an amount of risk you are comfortable with

Katrina works for Penny's Pickles, which offers a 401(k) match for up to 3% of her salary, which is $65,000 per year. In her budget, she only has $150 per month available to save for retirement. What should she do?

Contribute the full $150/mo to the 401(k) because her company will match that full amount, "doubling" her investment every month

A disadvantage of using a robo-adviser might be that…

You may not be able to get advice from a human financial advisor when you want it

Sam is 22, just started his first full-time job, and is selecting his investments through his company's 401(k) plan. Why might a target date fund (TDF) be a good option for Sam? 

A TDF will automatically adjust his asset allocation based on the retirement year he has chosen

What is one question an investor should ask when deciding whether or not they would like to open a Roth IRA or a Traditional IRA?

Do I want to pay taxes now or later?

Nancy is new to investing and is eager to get started. All of the following are thing she should do EXCEPT...

Pick individual stocks to see if she can beat the market

Sanjana is explaining what Social Security is to her younger brother. Which of the following descriptions should she use? 

Social Security is a government program that pools contributions from current workers to fund retirement support benefits to those who are eligible

As a shareholder in a public company, what are the benefits available to you? 

  You may receive dividends from the company, if the company pays them, and you have ownership of a portion of the company

Why are Index Funds such a popular investing option?

They provide a low-cost, diversified investment option that closely matches the overall return of a given index, such as the S&P 500

You buy a bond with a fixed coupon rate of 5%. A year later, similar bonds that are issued have a coupon rate of 3%. Which of the following is TRUE? 

The price of your bond will increase

Geraldo reviews his brokerage statement and sees the following two mutual fund investments that he made a year ago. ActiveFund20 had an average return (before fees) of 7.0% per year and an annual fee of 1%. PassiveFund500 had an average return (before fees) of 6.5% per year and an annual fee of 0.1%. Which investment had a better return for Geraldo (net of fees)? 

PassiveFund500: It had an overall return of 6.4% while ActiveFund20 had an overall return of 6.0%

1.       Define the Stock Market.

The stock market is where someone can buy a share of a company

What is the NASDAQ? Dow Jones Industrial?

NASDAQ- Electronic exchange where stocks are traded

Down Jones Industrial- Best known measure of a stock prices consisting of 30 large US companies

Define Market Cap

Total current market value of all outstanding shares of a company

What is a stock split

An action where a company increases the number of shares outstanding and lowers the individual value of each share