Stocks and Bonds

Why would someone choose to put money in stocks as opposed to a savings account that earns interest? (Choose the best answer)

• They are guaranteed a return in a savings account

• There is potential to earn more money in the savings account

• They are guaranteed a return in stocks

• There is potential to earn more money in the stock market

A mutual fund is

• like a loan where you are giving money in exchange for an interest payment.

• is issued by the government to support government spending (schools, roads, low-income housing).

• an investment with diversified stocks and bonds.

Which would be considered the highest risk investment type?

• Stock

• Mutual Fund

• Bond

• Money Market Account

Profit from selling stock at a higher price than one paid for it.

• Dividend

• Capital Loss

• Capital Gain

• Stock Option

Stockholders can reduce the risk on their stock investment by diversifying their portfolios.

• TRUE

• FALSE

Companies like Macy's, Chipotle, and McDonalds would most likely trade stocks on this market.

• New York Stock Exchange

• NASDAQ

• Tokyo Stock Exchange

• London Stock Exchange

This is when a company will pledge to repay a specific amount of money along with interest

• Corporate Bond

• Government Bond

• James Bond

• Savings Bond

What is a primary reason investors might choose bonds over stocks?

• A) Bonds typically offer higher returns than stocks

• B) Bonds are generally considered less risky than stocks

• C) Bonds are more liquid than stocks

• D) Bonds have no risk of default

Which of the following is a characteristic of a stock?

• A) It represents a loan to a company

• B) It provides fixed interest payments

• C) It represents ownership in a company

• D) It is issued by the government

What is the main purpose of a stock exchange?

• A) To provide loans to companies

• B) To facilitate the buying and selling of stocks

• C) To regulate interest rates

• D) To issue government bonds