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Investment Basics Scavenger Hunt

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Questions and Answers

What does the term 'invest' mean?

To buy a specific type of stock
To put money into something with the expectation of earning a profit (correct)
To spend money on a specific item
To lend money to a friend

What are the main types of investments?

Pensions, IRAs, and 401k
Stocks, bonds, and mutual funds
Stocks, bonds, cash equivalents, and real assets (correct)
Cash equivalents, real assets, and pensions

What is a bond?

A type of investment that represents a loan (correct)
A type of pension plan for retirement
A type of cash equivalent that earns high interest
A type of stock that gives ownership

What is a rate of return?

The amount of money earned as interest (C) Signup and view all the answers

What is an opportunity cost?

The value of the next best alternative that is given up (A) Signup and view all the answers

What is the purpose of a savings account?

To build up an emergency fund (C) Signup and view all the answers

What is the main advantage of a Certificate of Deposit (COD) over a savings account?

The higher interest rate offered (C) Signup and view all the answers

Why is an Index Fund a good option for long-term investments?

Because it diversifies risk across the entire stock market (A) Signup and view all the answers

What happens to the value of your shares when the company performs well?

It increases (A) Signup and view all the answers

What is the main benefit of Government Bonds in a portfolio?

They reduce risk by being a stable investment (A) Signup and view all the answers

What happens if you withdraw your money from a COD before the term is up?

You are charged a penalty (B) Signup and view all the answers

What is the goal of buying and selling individual stocks?

To buy low and sell high to make a profit (A) Signup and view all the answers

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