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Questions and Answers
What are the three major types of ownership investments?
What are the three major types of ownership investments?
What are the key differences between an IRA and a Roth IRA?
What are the key differences between an IRA and a Roth IRA?
Which is a significant advantage of tax-sheltered retirement accounts?
Which is a significant advantage of tax-sheltered retirement accounts?
What does the FIFO method stand for in investment tax reporting?
What does the FIFO method stand for in investment tax reporting?
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Which of the following is a common strategy to reduce taxes on investments?
Which of the following is a common strategy to reduce taxes on investments?
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What is the primary purpose of money market mutual funds?
What is the primary purpose of money market mutual funds?
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What differentiates an initial public offering (IPO) from the price per share?
What differentiates an initial public offering (IPO) from the price per share?
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What does the price/earnings ratio (P/E) indicate about a stock?
What does the price/earnings ratio (P/E) indicate about a stock?
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Which statement accurately describes a bond's credit rating?
Which statement accurately describes a bond's credit rating?
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Which of the following investments is considered a major alternative to bonds?
Which of the following investments is considered a major alternative to bonds?
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What is a key advantage of investing in ETFs over mutual funds?
What is a key advantage of investing in ETFs over mutual funds?
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How can diversification benefit an investment portfolio?
How can diversification benefit an investment portfolio?
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What defines a treasury bond?
What defines a treasury bond?
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Study Notes
Chapter 1: Making Sense
- Defines ownership investments and categorizes them (three major types).
- Outlines pros and cons of each investment type.
- Discusses strategies for achieving financial independence.
- Covers SMART financial goals.
- Defines lending investments and their types.
- Explains the pros and cons of lending investments.
- Introduces brokers and investment firms.
- Outlines methods for choosing the best brokerage/ investment firm.
Chapter 2: Retirement Accounts
- Compares short-term and long-term financial goals.
- Defines a "rainy-day" fund.
- Explains consumer credit.
- Discusses different retirement accounts and their acronyms.
- Explains tax advantages of retirement accounts.
- Explains disadvantages of retirement accounts.
- Details how to avoid early withdrawal penalties.
- Explains IRA vs. Roth IRA retirement plans.
Chapter 3: Risk & Returns
- Explains the importance of risk and return.
- Outlines methods for reducing investment risk.
- Defines inflation and its impact on purchasing power, providing an example.
- Highlights the importance of liquidity.
- Discusses strategies for minimizing risks related to investment.
- Defines "rate of interest" and "yield."
- Explains the difference between real return and average return.
- Describes how compounding grows investment dollars.
Chapter 4: Minimize Taxes
- Defines tax-sheltered retirement accounts.
- Compares capital gain and ordinary income tax.
- Provides an example of federal marginal income tax rates.
- Explains the advantages of understanding marginal tax rates.
- Discusses knowledge of corporate tax rates.
Chapter 5: Money Mutual Funds
- Explains what money market mutual funds are.
- Details the benefits and drawbacks of money market mutual funds.
- Lists common money fund holdings.
- Describes different methods of accessing funds from mutual funds.
- Provides guidance on how to choose good money market mutual funds.
- Defines municipal bonds.
- Outlines alternative investment options to mutual funds.
###Chapter 6: Stocks
- Defines stocks and provides examples.
- Expands on offering stocks.
- Presents benefits and drawbacks of investing in stocks.
- Introduces Initial Public Offerings (IPOs) and their relation to stock prices per share.
- Explains what happens when a company issues new stock.
- Defines profit and earnings.
- Provides examples of non-profit organizations.
- Describes main ways companies increase profits.
- Discusses methods of earning or making profits from investing in a company's stock.
Chapter 7: Bonds
- Defines bonds and why they are considered as investment options.
- Outlines the benefits and drawbacks of bond investments.
- Expands on the taxation implications of bonds.
- Presents comparisons between bond mutual funds, ETFs, and individual bonds.
- Discusses bond issuers.
- Defines credit rating of bonds.
- Explains bond maturity.
- Explains the yield curve.
Chapter 8: Fund Investing (ETFs)
- Introduces Exchange-Traded Funds (ETFs).
- Discusses methods of investing in ETFs.
- Covers reasons for investing in funds.
- Explains the role of individual fund managers.
- Outlines methods to keep costs down on funds.
- Defines index funds.
- Discusses active versus passive management strategies for funds.
- Explains what mutual index funds are.
Chapter 9: Investment Alternatives
- Defines options and explains their pros and cons.
- Lists types of commodities.
- Explains metal ETFs.
- Defines cryptocurrencies and their pros and cons.
- Explains collectibles and their pros and cons.
- Covers annuities and cash-value life insurance, and provides details about their correlation.
- Defines affiliates.
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Description
Explore the fundamentals of finance investment through the first three chapters. Gain insights into ownership and lending investments, retirement accounts, and the crucial dynamics of risk and returns. Whether you’re looking to achieve financial independence or understand retirement planning, this quiz covers key strategies and concepts.
