Investing

Question 1

_______ are interest- bearing, negotiable certificates of long-term debt. (________)

Answer 1

Bonds, loan

Question 2

_______ are shares of ownership in a business corporation’s assets and earnings. (________)

Answer 2

Stocks, own

Question 3

_______ pool the invested funds of many investors and use them to invest in a diversified portfolio. (includes _____________)

Answer 3

Mutual funds, stocks and/or bonds

Question 4

______________
◦ Low risk, low reward

Answer 4

US Government Bonds

Question 5

______________
◦ Some risk, some reward
◦ No federal taxes; and if purchased in same state you reside, no state tax

Answer 5

Municipal Bonds

Question 6

______________
◦ Higher risk, higher reward
◦ Will pay tax

Answer 6

Corporate Bonds

Question 7

___________ is the process of spreading your assets among several different types to lessen risk.

Answer 7

Asset allocation

Question 8

___________ provides a measure of safety and reduces risk because a loss in one type may be offset by gains from others.

Answer 8

Diversification

Question 9

___________ plans are retirement plans that are funded, at least in part, by an employer.

Answer 9

Employer pension

Question 10

___________ plans are provided by a
local, state, or federal government.

Answer 10

Public pension

Question 11

___________ plans are set up by individuals and are especially important to self-employed people and other workers who are not covered by employer pension plans

Answer 11

Personal retirement

Question 12

___________ are contracts purchased from an insurance company that provide for a sum of money to be paid to a person at regular intervals for a certain number of
years or for life.

Answer 12

Annuities

Question 13

Four major sources of retirement income:

Answer 13

Employer pension, public pension, personal retirement, annuities