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Questions and Answers
What is the primary purpose of insurance premium?
What is the primary purpose of insurance premium?
- To cover daily living expenses
- To provide regular income to individuals
- To invest in the stock market
- To guard against unforeseen and adverse events (correct)
What is the purpose of creating a budget?
What is the purpose of creating a budget?
- To increase unnecessary expenses
- To spend money without any plan
- To reduce and eliminate unnecessary expenses (correct)
- To invest in risky assets
Which investment is considered the safest among the options provided?
Which investment is considered the safest among the options provided?
- Treasury Bond (correct)
- Life Insurance
- Money market mutual funds
- Health Insurance
What is the overall objective of a shareholder?
What is the overall objective of a shareholder?
How should one think of stocks?
How should one think of stocks?
Which investment has the lowest risk and lowest rate of return?
Which investment has the lowest risk and lowest rate of return?
What is the purpose of a company issuing stock?
What is the purpose of a company issuing stock?
What is the term that refers to how comfortable a person is with the ups and downs of investing?
What is the term that refers to how comfortable a person is with the ups and downs of investing?
What is the strategy to earn short-term income from stocks?
What is the strategy to earn short-term income from stocks?
Which investment do you become part owner of a company by purchasing?
Which investment do you become part owner of a company by purchasing?
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Study Notes
Insurance and Financial Planning
- The primary purpose of an insurance premium is to manage and mitigate financial risk.
- The purpose of creating a budget is to allocate income towards expenses, savings, and debt repayment.
Investing and Stocks
- The safest investment option is typically considered to be a U.S. Treasury Bond.
- The overall objective of a shareholder is to maximize their return on investment (ROI).
- Stocks represent ownership in a company and should be thought of as a long-term investment.
- The investment with the lowest risk and lowest rate of return is typically a savings account or a money market fund.
Company Finance
- The purpose of a company issuing stock is to raise capital for business operations and growth.
Investor Psychology
- Risk tolerance refers to how comfortable a person is with the ups and downs of investing.
Investment Strategies
- Dividend investing is a strategy to earn short-term income from stocks.
- When purchasing stocks, you become a part-owner of a company.
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