Chapter 11 Flashcard

Front

What type of investment spreads the risk of investing across many securities?

Back

mutual fund

Answer explanation

Mutual funds are composed of investments in many companies rather than just one (as in stock in just McDonald's or Home Depot as examples).

Front

A certificate representing a long-term loan to a company or the government

Back

bond

Answer explanation

Bonds are different than stocks. Bonds are loans where stocks involve ownership in a company.

Front

Jamaul makes an investment in Walmart Corporation. He now has an ownership share in Walmart. What did Jamaul purchase?

Back

stock

Front

What type of investment is specifically designed to help investors deal with high inflation rates? Options: EE Bonds, Money Market Funds, Mutual Funds, I Bonds

Back

I Bonds

Answer explanation

I Bonds are adjusted to account for inflation.

Front

The type of investment that offers little risk, but a lower rate of return is

Back

bonds

Front

The type of investment that generally produce higher rates of return but greater risk is

Back

stocks

Front

Credit unions are

Back

owned by their members.

Answer explanation

Credit unions are owned by the people who are members of the credit union. Banks are owned by their investors.

Front

Deanna is looking to put her money somewhere that she can easily get her money out when she needs it. Deanna's priority in saving/investing is

Back

high liquidity.

Answer explanation

Liquidity is how easy/hard it is to access your money. The easier it is to get to your money, the higher the liquidity.

Front

Nat gets a check from the profits made by Nabisco, a company in which he's purchased stock. This share of money is called

Back

a dividend.

Answer explanation

Dividends are shares of profits made by a company which are distributed to their investors.

Front

Keeley is considering which type of local institution she should put her money. Her priority is getting a high interest rate on her deposits. Where should she put her money?

Back

Credit Union

Answer explanation

Credit unions give their profits to their members in the form of higher interest rates on savings and lower interest rates on loans. Banks give their profits to their investors.