1. 4.03 Bluff

2. What’s the difference between saving and investing?
Saving=putting money aside
Investing=putting money to use in order to make more money

3. What’s the formula to calculate interest?
I=PRT

4. What are the 3 savings plans?
Savings account, CD, money market account

5. This type of savings plan requires a minimum deposit and interest is earned based on government and corporate securities. Usually withdrawals are allowed without penalties.
Money market account

6. Certificate of deposit
This type of savings plan requires a minimum deposit, money to remain deposited for a period of time without penalties. Penalties may be assessed if money is withdrawn before specified time
Certificate of deposit

7. Name 3 investing options.
Stocks
Bonds
Mutual Funds and Exchange-traded Funds
Real Estate
Commodities
Collectibles

8. What’s the difference between common stock and preferred stock?
Preferred stock pays dividends before common stock is paid.
Preferred stockholders do not have voting powers; but common stockholders are invited to annual corporate meetings and permitted to one vote per share of stock owned.
Preferred stock is less risky than common stock.

9. Part of the profit shared with the stockholders
What are dividends?
Part of the profit shared with the stockholders

10. How are stockbrokers paid?
Commission

11. What is the largest stock exchange in the US?
NYSE

12. Inflation Interest rates Consumer spending Employment
Name 2 economic factors that could influence investors in selecting stock.
Inflation
Interest rates
Consumer spending
Employment

13. Price per earnings ratio
This ratio is the relationship between a stock’s selling price and it’s yield.
Price per earnings ratio

14. What’s the formula to calculate yield?
current value – original value
Original value

15. A promissory note to pay back a specified amount of money at a stated rate on a specific date.
Bond

16. These bonds are issued by local and state governments for public service projects
Municipal bonds

17. An example of these bonds are the EE bond interest is paid once the bond is cashed. The HH bond interest is paid twice a year, which may be considered income.
US Savings Bonds

18. What’s the time frame for treasury bills?
91 days to a year

19. What’s the time frame for treasury notes?
1-10 years

20. What are corporate bonds used to finance?
Expansion, new products, debt repayment, etc

21. Aggressive-growth stock funds
This type of mutual fund looks for quick growth, but also have an higher risk than other stock.
Aggressive-growth stock funds

22. This type of mutual fund concentrates on stocks that pay regular dividends.
Income funds

23. This type of mutual fund invest in a variety of company stock around the world.
International funds

24. This type of mutual fund purchase stocks of companies in the same industry.
Sector funds

25. This type of mutual fund concentrate in corporate bonds.
Bond funds

26. This type of mutual fund invest in both stocks and bonds.
Balanced funds

27. What does ETF stand for?
Exchange-traded fund

28. Name one advantage of owning real estate.
tax benefits, increased equity, and pride of ownership

29. Name one disadvantage of owning real estate.
property taxes, interest payments, property insurance, and maintenance

30. What are commodities and futures?
grain, livestock, and precious metals. Commodity investors usually agree to buy and sell for an amount at a specified price in the future. Examples may include rice, cattle, and gold.

31. Name one example of a collectible.
art work, antique furniture, and autographed items.

32. What are 2 of the 4 evaluation factors for investment options?
Safety and risk: how likely are you to lose your money?
Potential yield: how much profit are you likely to make on this investment?
Liquidity: how fast can you turn this investment into cash?
Taxes: how much will you have to pay in taxes for this investment?