Bob plans to invest all of his money in individual stocks. Why is this a bad inestment strategy?

Buying individual stocks has high risk and little/no diversification.

What is a key difference between saving and investing?

Saving guarantees you the money you put away. Investing has no guarantees.

The risk level of bonds...

moderate risk, safer than stocks

How does diversification impacts risk when you are investing?

spreading your money across multiple investments, which decreases the risk

A stock is a share of ownership in a company.

is earning interest on the original amount deposited + any interest earned

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NGPF 6.0 Investing MS

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Middle School NGPF investing test review

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Questions 15

Answers

1
Which of the following is a characteristic of an index fund?
insured
high fees
professionally managed
diversified
2
To open a Custiodial IRA account you must...
by 18 years old
have a saving and checking account
have a taxable income
have a driver's license
3
You are 14 and have a job. Which account should you invest in?
savings account
401k
custodial brokerage account
custodial Roth IRA
4
Bob plans to invest all of his money in individual stocks. Why is this a bad inestment strategy?
He will need too much money to get started.
Buying individual stocks has high risk and little/no diversification.
Purchasing single stocks is low risk and low return.
He will need separate accounts for each stock he buys.
5
You should create an investment portfolio that includes an amount of risk you are comfortable with.
False
True
6
What is the current trading price of Nike stock?
-$0.36
$2.41
$186.75
$101 ish
7
The only way to make money in bonds is to sell your shares of th bond.
False
True
8
What is a key difference between saving and investing?
Saving guarantees you the money you put away. Investing has no guarantees.
Saving earns a much higher rate of return than investing your money
Saving is for long-term goals; investing is for short-term goals
Saving earns compound interest while investing earns simple interest
9
The risk level of bonds...
moderate risk, safer than stocks
Is zero.
is high.
moderate to low risk, riskier than stocks.
10
How does diversification impacts risk when you are investing?
spreading your money across multiple investments, which decreases the risk
putting all of your money into one investment, which increases risk.
spreading your money across multiple investments, which increases risk.
putting all of your money into one investment, which decreases risk.
11
What is a stock?
A stock is a lending investment to the government or a company.
A stock is an insured bank account with high risk.
A stock is a share of ownership in a company.
a type of investment that uses money from investors to purchase investments
12
You are young and want to take a moderate risk. You want something low cost and diversified. What do you pick?
a savings account
a bond
An Index Fund
single stocks
13
Dahlia is 24, makes $85,000/year, has a fully funded Emergency Fund, and extra income. What should be her investor risk?
aggressive
moderate
conservative
don't invest
14
compound interest
is earning a fixed dollar amount on your bank account each month.
Compound interest is earning interest on the original amount you deposited.
is the amount of interest you are charged on your bank account each month
is earning interest on the original amount deposited + any interest earned
15
What type of market is described by a receding economy and a decline in the stock market?
Bear Market
Deer Market
Pig Market
Bull Market

NGPF 6.0 Investing MS Flashcards | StudBud