Which of the following correctly orders the investments from LOWER risk to HIGHER risk?
Diversified mutual fund ? Treasury bond ? Stock
Why might a town decide to issue bonds?
Both A and B
What is the primary reason to issue stock?
To raise money to grow the company
What are dividends?
A distribution of a small percentage of profits to shareholders.
Diversification is important in investing because…
It helps you to balance your risk across different types of investments.
When might be the best time to start saving for retirement?
At the earliest possible date.
Which best describes the difference between stocks and bonds?
Stocks allow investors to own a portion of the company; bonds are loans to the company.
When you buy a ____ , you are loaning money to an organization.
Which of the following would be considered the highest risk portfolio?
A portfolio made up of 60% stocks, 30% mutual funds, and 10% Treasury bonds.
When it comes to investing, what is the typical relationship between risk and return?
The greater the potential risk, the greater the potential return.
If an employer does not offer a retirement plan, what might be another way to save for retirement?
Both A and B
What happens when a bond becomes due?
The issuer will pay you back, plus interest.
Why is a high-quality bond typically considered a lower-risk investment than a stock?
A bond typically pays a fixed, predictable amount of interest each year.
Which of the following is generally true about 401(k) and 403(b) retirement plans?
All of the above