12 Questions
What is the primary characteristic that defines an asset class?
The similarity in characteristics among investments within the class
What is a bond typically characterized by?
A debt instrument representing a loan made by an investor to a borrower
What is the safest investment option in the investment risk ladder?
Cash bank deposit
What is the primary benefit of a certificate of deposit (CD) over a savings account?
Higher interest rates
What is a disadvantage of keeping money in a savings account?
The interest earned is usually low and may not beat inflation
What is the penalty for withdrawing money early from a certificate of deposit (CD)?
Early withdrawal penalties
How are mutual funds typically valued?
At the end of each trading day
What is the primary factor that determines bond rates?
Interest rates
What is the minimum investment required to invest in a mutual fund?
$1,000 per share
What is a key characteristic that distinguishes ETFs from mutual funds?
Trading throughout the day
What is the primary benefit of ETFs for investors?
Ease of trading and broad coverage
What is the relationship between shareholders and a company's assets?
Shareholders have a claim on the company's assets only in the event of liquidation
Learn about asset classes in investments, including their definitions and examples. Understand the investment risk ladder and how different asset classes behave in the market.
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