HS (PF) Chapter 9 Lesson 4 Protecting your investments Review

What is the practice of dividing the money a person invests among different types of investments to lower risk called?

• Capitalization

• Investment

• Diversification

• Allocation

What is the total dollar market value of a company or how much a company is worth known as?

• Diversification

• Capitalization

• Investment

• Allocation

What was the outcome for Janelle who did not diversify her investment in mutual funds?

• She chose a less risky option and her other mutual funds picked up the slack.

• She lost all her money.

• She made more money without diversification.

• She did not make as much money as she hoped.

What is the main idea of the lesson on protecting your investments?

• Diversification is not necessary for long-term savings goals.

• Diversification can increase the risk of losing money.

• Diversification helps to balance risk and improve chances of building wealth for long-term goals.

• Investing in only one type of mutual fund is the best strategy.

Which type of mutual fund buys stock in medium-sized companies that have experienced some growth and are still expanding?

• Growth stock mutual funds (mid-cap)

• Growth and income stock mutual funds (large-cap)

• Aggressive growth stock mutual funds (small-cap)

• International stock mutual fund

What is the primary goal of aggressive growth stock mutual funds (small-cap)?

• To provide steady and predictable returns

• To invest in companies from around the world

• To provide maximum long-term growth from stocks of primarily smaller companies

• To protect if America's economy takes a hit

What does the term 'capitalization' refer to when discussing large-, mid-, and small-cap companies?

• The number of employees in a company

• The total debts of a company

• The market value of a company

• The annual revenue of a company

According to the Risky Business Diversification Plan, what percentage of your investments should be allocated to each type of mutual fund?

• 30% Growth Stock Mutual Fund (Mid-Cap), 30% Growth and Income Stock Mutual Fund (Large-Cap), 20% Aggressive Growth Stock Mutual Fund (Small-Cap), 20% International Stock Mutual Fund

• 25% Growth Stock Mutual Fund (Mid-Cap), 25% Growth and Income Stock Mutual Fund (Large-Cap), 25% Aggressive Growth Stock Mutual Fund (Small-Cap), 25% International Stock Mutual Fund

• 20% Growth Stock Mutual Fund (Mid-Cap), 30% Growth and Income Stock Mutual Fund (Large-Cap), 25% Aggressive Growth Stock Mutual Fund (Small-Cap), 25% International Stock Mutual Fund

• 25% Growth Stock Mutual Fund (Mid-Cap), 30% Growth and Income Stock Mutual Fund (Large-Cap), 20% Aggressive Growth Stock Mutual Fund (Small-Cap), 25% International Stock Mutual Fund

What should you never do with your investments according to the text?

• Invest in something you don't understand

• Diversify your investments across different types of mutual funds

• Consult a professional to understand what you're investing in

• Make sure you understand where you're putting your money

Why is it not recommended to borrow from your retirement account?

• It increases the capitalization of your investments

• It can result in having to pay back within a certain period or getting hit with a penalty on top of the taxes you'll owe for the early withdrawal

• It diversifies your investment portfolio

• It guarantees a fixed return on investment