Unit 7 Investing Review

The difference between active and passive funds is that:

active funds seek to ___, whereas passive funds seek to ___.

• make the highest profit; at least return the initial investment

• be on top of current market trends; use established market algorithms

• beat the market; only match the market

• create maximum profits; diversify as much as possible

_ is a financial asset, such as a stock or a bond, that can be bought and sold in a financial market

• Investment

• Security

• Rate of Return

• 401k

Interest earned on both the principal amount and any interest already earned

• Direct Deposit

• Compound Interest

• Simple Interest

• Complex Interest

The rate at which the price of goods increases and consumer purchasing power decreases over time

• Interest

• Coupon Rate

• Inflation

• Sifting

A _ is a share of the value of a company, which can be bought, sold, or traded as an investment and which gives the investor small partial ownership of the company

• Mutual Funds

• Bond

• Stock

• Treasury Bond

A _ is a security in which the investor loans money to a company or government, which then pays regular interest to the bondholder and returns the principal on the bond's maturity date

• Mutual Funds

• Bond

• Stock

• Treasury Bond

Which of the following terms refers to the measurement of the likelihood that a bondholder will be paid back

• Bond Measurement

• Coupon

• Bond Rating

• Rate of Return

A _ is the annual interest payment on a bond, usually expressed as a percentage of its face value

• Bond Measurement

• Coupon

• Bond Rating

• Rate of Return

Which of the following retirement options are considered pre-tax?

(Remember: pre-tax means the money is placed into your account before it is taxed as income)

SELECT ALL THAT APPLY

• Pension

• Traditional IRA

• Roth IRA

• Traditional 401k or 403b

_ is a federal program that provides monthly benefits to millions of Americans, including retirees, military families, surviving families of deceased workers, and disabled individuals

• Pension

• Social Security

• HSK Fund

• FICA