EverFi – Week 9 – “Investing”
| 1. | ________ are typically comprised of a mix of ________ and ________. | Mutual Bonds; Stocks; Bonds. | |
| 2. | Diversification is important in investing because… | It helps you to balance your risk across different types of investments. | |
| 3. | Generally speaking, the _______ the risk, the _______ the potential return or loss. | Higher; Higher | |
| 4. | If an employer does not offer a retirement plan, what might be another way to save for retirement? | 401k Plan Both A and B | |
| 5. | What are dividends? | A distribution of a small percentage of profits to shareholders. | |
| 6. | What happens when a bond becomes due? | The issuer will pay you back, plus interest. | |
| 7. | What is the primary reason to issue stock? | To raise money to grow the company | |
| 8. | When it comes to investing, what is the typical relationship between risk and return? | The greater the potential risk, the greater the potential return. | |
| 9. | When might be the best time to start saving for retirement? | At the earliest possible date. | |
| 10. | When you buy a ____ , you are loaning money to an organization. | Bonds | |
| 11. | 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. | |
| 12. | Which investment type typically carries the least risk? A |
Savings Account | |
| 13. | Which of the following correctly orders the investments from LOWER risk to HIGHER risk? | Diversified mutual fund − Treasury bond − Stock | |
| 14. | Which of the following is generally true about 401(k) and 403(b) retirement plans? | All of the above | |
| 15. | 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. | |
| 16. | Which type of portfolio might a young investor who is not afraid of risk choose? | … |
| 17. | 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. | |
| 18. | Why might a town decide to issue bonds? | – To save money for their residents – To build new roads or bridges |
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