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Questions and Answers
What defines a Certificate of Deposit (CD)?
What is a Municipal Bond primarily used for?
What are dividends?
What is the primary function of a 401(k)?
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What is meant by Capital Gains?
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Study Notes
Certificate of Deposit (CD)
- Fixed sum of money held for a specific time period
- Earns interest
Municipal Bond
- Issued by local, county, or state governments
- Funds local projects
- Not taxed at the federal level
Stock
- Represents ownership in a company
- Gives the owner a claim to the company’s assets and earnings
Bond
- Loan from an investor to a borrower (government, corporation, or municipality)
- Repaid with interest after a specified period
Dividends
- Regular payments (typically quarterly) made by a company to shareholders
- Paid from profits or reserves
401(k)
- Retirement savings plan
- Employees contribute and invest a portion of their paycheck tax-free
Capital Gains
- Profit from selling property or an investment
Mutual Fund
- Pool of money from multiple investors
- Used to buy stocks, bonds, and other investments
- Managed by professionals who choose investments
Savings Account
- Holds money not intended for immediate spending
- Earns moderate interest
- Money can be withdrawn at any time
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Description
Test your knowledge on various financial instruments including certificates of deposit, municipal bonds, stocks, and more. This quiz covers essential concepts that are crucial for understanding personal finance and investing. Perfect for students and anyone interested in finance!