A list of all of your investments.

Quality of an asset that permits it to be converted quickly into cash without loss of value.

A piece of ownership in a company, mutual fund or other investment.

A retirement savings plan offered by a corporation to its employees; The employee contributes money from his/her gross pay, and the money grows tax deferred.

An account or arrangement in which one would put their money for long-term growth.

Degree of uncertainty of return on an asset.

A pool of money managed by an investment company and invested in multiple companies.

Tax-deferred arrangement for individuals with earned income; Individual retirement arrangement.

Long-term investments properly diversified include the following:

Growth, growth and income, international, and aggressive growth.

Which statement is true about liquidity?

The more liquid an investment, the less return.

Explain why you should never invest using borrowed money:

This is a bad idea because it increases the risk of the investment.

Explain the risk return ratio:

This is used by investors to compare the expected returns of an investment to the amount of risk they take to get the returns.

Explain why single stocks carry a high degree of risk and why mutual funds carry less risk.

Single stocks carry a high degree of risk because you can not predict what one company will do. Mutual funds are less risky because you have, on average, 90-120 Page 2 companies in that fund.

Explain what the rule of 72 is and how it is calculated

The rule of 72 is a simple way to determine how long an investment will take to double given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors obtain a rough estimate of how many years it'll take the investment to 2x

Is real estate a liquid investment? Explain why or why not.

Real estate is not considered a liquid investment because it can not be quickly converted into straight cash.

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EconChapter8

Term	Definition
Portfolio	A list of all of your investments.
Liquidity	Quality of an asset that permits it to be converted quickly into cash without loss of value.
Share	A piece of ownership in a company, mutual fund or other investment.
401(k)	A retirement savings plan offered by a corporation to its employees; The employee contributes money from his/her gross pay, and the money grows tax deferred.
Investment	An account or arrangement in which one would put their money for long-term growth.
Risk	Degree of uncertainty of return on an asset.
Mutual Fund	A pool of money managed by an investment company and invested in multiple companies.
IRA	Tax-deferred arrangement for individuals with earned income; Individual retirement arrangement.
True/False: A single stock would be a good place to keep your emergency fund	False
True/False: Diversification lowers risk with investing	True
Long-term investments properly diversified include the following:	Growth, growth and income, international, and aggressive growth.
Which of the following is a good investment option?	Mutual funds.
Which statement is true about liquidity?	The more liquid an investment, the less return.
Explain why you should never invest using borrowed money:	This is a bad idea because it increases the risk of the investment.
Explain the risk return ratio:	This is used by investors to compare the expected returns of an investment to the amount of risk they take to get the returns.
Explain why single stocks carry a high degree of risk and why mutual funds carry less risk.	Single stocks carry a high degree of risk because you can not predict what one company will do. Mutual funds are less risky because you have, on average, 90-120 Page 2 companies in that fund.
Explain what the rule of 72 is and how it is calculated	The rule of 72 is a simple way to determine how long an investment will take to double given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors obtain a rough estimate of how many years it'll take the investment to 2x
Is real estate a liquid investment? Explain why or why not.	Real estate is not considered a liquid investment because it can not be quickly converted into straight cash.

Created by: bradenhfsow

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