7.2 - Stocks, Bonds, & Mutual Funds

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What is diversification in investing?

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Reducing risk by investing in different investments.

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How do stocks and bonds differ in terms of inflation protection?

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Stocks may help protect your money from inflation, while bonds may be more susceptible to losing value over time due to inflation.

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What does it mean to diversify your portfolio?

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Spreading risk by investing your money in a variety of funds and investment options.

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How can someone make money from investing in a stock?

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They receive dividends or sell the stock at a higher price than what they bought it for.

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What is NOT a benefit of mutual funds?

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Fees and sales loads.

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What are stocks?

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Shares of ownership in a company.

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What are bonds?

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Loans made to corporations or governments that pay interest over time.

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What is a mutual fund?

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An investment vehicle that pools money from many investors to purchase a diversified portfolio of stocks, bonds, or other securities.

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What is the primary benefit of investing in stocks?

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Potential for high returns and capital appreciation.

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What is the primary benefit of investing in bonds?

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Steady income through interest payments and lower risk compared to stocks.